New royalty rule to benefit radio stations | delhi | Hindustan Times
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New royalty rule to benefit radio stations

FM radio stations across the country will have to pay a flat 2 per cent of their advertising revenues as royalty to music companies, the Copyright Board has ruled in a landmark order.

delhi Updated: Aug 25, 2010 22:54 IST
Charu Sudan Kasturi

FM radio stations across the country will have to pay a flat 2 per cent of their advertising revenues as royalty to music companies, the Copyright Board has ruled in a landmark order.

The order, passed by the board under Chairman Raghbir Singh on Wednesday, for the first time ties royalty to be paid to the revenue an FM channel actually earns, and is likely to benefit major radio stations.

Radio stations and music channels have been at loggerheads for over two years over fixing royalty for music played on FM across the country.

Music companies at present demand a fixed amount from each radio station, irrespective of the revenue they actually earn. Major FM stations that use songs from multiple music companies and are easy to track often end up spending over Rs 50 crore annually on royalties, sources said.

“The order replaces the ad hoc amount charged by music companies. We believe it will help both music companies and radio stations in the long run,” a Copyright Board source told HT.

While the new rule is likely to push down the amount major radio stations have to pay to music companies, it is also likely to help music firms extract a realistic amount from more localised FM channels.

Many FM stations that operate out of small towns or hamlets at present survive without paying any royalty to music companies.

These FM stations are unable to pay major amounts unlike their counterparts in metros and music companies often consider it too complicated and cumbersome to work out individual deals with each local channel, sources said.

Now, all registered FM channels – whether operating in a small town or in a metro – will be legally bound by the order to pay an amount based on their revenue.

“Smaller stations will have to pay less. The order establishes a level playing field,” a source said.