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Royalty war halts FM’s small-town march

business Updated: Aug 23, 2009 21:02 IST
Shalini Singh

Radio stations and artists’ copyright bodies are set for a decisive round in their face-off over royalties, a deadlock that stands in the way of the next stage of the FM radio boom — small-town India.

It’s a battle that is also making the 73-year-old, state-run All India Radio (AIR) — which has its footprint across 91.8 per cent of the Indian population —wary of the looming small-town competition.

The case is being argued before the semi-judicial Copyright Board (CB) and the warring factions hope that the next round, scheduled for August 24 (Monday), will bring about a consensus.

Currently, for every hour of music they play, FM stations have to pay Rs 660 each to copyright society Phonographic Performance Ltd (PPL) and the Indian Performing Right Society Ltd (IPRS), a 40-year-old association of composers and writers that issues music licences and collects royalties. In addition, they also have to pay the same rate to T-series, Yashraj, Big FM etc, music companies that are not members of either PPL or IPRS. That works out to anything between Rs 10 lakh to Rs 50 lakh per year for a station.

Radio operators argue that they should not be charged the same rate for small towns and big cities alike. Supporting their stand is Information and Broadcasting Minister Ambika Soni, who told Hindustan Times that a flat royalty rate makes it an unviable business proposition for non-metro operators. “I met (Union Minister for Science & Technology) Kapil Sibal and told him that small-town operators can’t afford high royalty rates. Something should be done about it.”

Apurva Purohit, CEO of Radio City and president of AROI (Association for Radio Operators for India), explained, “The international benchmark is 0.25 to 5 per cent of revenues in developed radio markets. Here, we pay 15 to 20 per cent.”

Chipped in Manoj Bhargav, spokesperson for 104 Fever, “FM stations are already bleeding because of royalty rates.” Purohit added grimly, “As it is, the industry has suffered huge losses after the economic slowdown. Some stations are even shutting down playtime at night.”

However, the IPRS alleges that radio operators are trying to wriggle out of royalty payments. Said its CEO Rakesh Nigam, “Many have even stopped paying royalties now.” The PPL refused to comment despite repeated queries.

The small-town factor assumes importance because, close to 15 years after the monopoly of the AIR ended, the march into Tier B and C cities will mark the third phase of FM radio revolution, in which it will also add multiple frequencies, broadcast news and increase foreign investment.