Phonographic Performance Limited (PPL), the umbrella association representing around 160 music companies in the country is considering an appeal next week against the Copyright Board’s order lowering the royalty to be payable to them by radio stations. They would like to increase the royalty payable to at least the rates previously agreed upon with government agencies.
According to agreed norms, All India Radio (AIR) pays Rs 600 every needle hour as music royalty to PPL. Saregama India’s managing director Apurva Nagpal, said, “The Copyright Board relied more upon external guidance than mutually agreed upon outlines with government bodies on music royalty rates in the domestic music industry. We do not know what rates can finally emerge but the rates paid by AIR should be considered before arriving upon a decision in a fresh hearing.”
If the petition goes through, radio companies would have to dole out around 10 per cent of their net advertising revenues as music royalty to PPL. At the moment, due to an order issued by the Copyright Board on August 26, royalty payments were reduced substantially, to two per cent of net advertising revenues of radio companies. Previously, radio stations had been paying Rs 661 per needle hour as royalty to music providers
According to industry sources, radio broadcasters were paying as much as Rs 100 crore per annum as royalty to music companies. The new decree by the Copyright Board reduced the burden by over 85 per cent to Rs 14 crore per annum. This, the Board held, would provide impetus to the fledging radio industry.
In its order, the Copyright Board has maintained, “It is true that FM radio industry is in a very bad state of financial health. Except one unit, ENIL...the rest are all loss-making since their beginning and many are on the road to go, or have gone, out of business. Their survival and growth is very much essential for nation building, as the government policy expects them to handle a priority area, which is spreading literacy. Music providers, including the respondent herein, are in a very good financial state, enjoying a robust compounded annual growth rate (CAGR).” Music companies, however, complain the order is against the spirit of promoting new content creation.
Ashish Pherwani, associate director, Ernst&Young, said “In the short-term, music companies will witness a fall in revenues. But in the longer run, with over 800 stations coming in when FM Phase III goes underway, the new rate will benefit both the radio industry as well as music companies. They have to work out a solution which will be beneficial to all stakeholders.”
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FM radio broadcasters have been contesting Phonographic Performance Ltd (PPL) since 2002 on the issue of royalty. PPL is the largest aggregator of music in the country, administering the broadcasting, telecasting and public performance rights on behalf of music companies. Its members include Saregama India, Universal Music India, Venus Records and Tapes Private Limited, Virgin Records, Times Music, Sony Music Entertainment India and Tips Industries, among others.