Have you ever wondered why there is so little variety on radio? A quick surf between half a dozen stations will invariably throw up the same popular chartbusters. Radio operators argue that three things — the prohibition on broadcasting news, the ban on having more than one station in a city and rising royalty costs — has impacted the variety of programming, ability to localise and profitability.
That is somewhat misleading. None of these reasons, except the inability to have more than one station in a city (or the ban on multiple frequencies), is perhaps a serious impediment to variety. What most operators will not admit is that the market for differentiated content is not yet significant enough to demand attention.
Take the the first reason dished out by the operators: royalty costs. About three-fourths of all music sold in India is from films, the most popular genre. As things stand, radio companies pay royalties to three organisations — PPL (Phonographic Performance Limited), the Indian Performing Rights Society (IPRS) for Hindi film music and SIMCA (The South Indian Music Companies Association) for South Indian music. In addition to this, two companies are among the other main royalty beneficiaries — Super Cassette Industries (T-Series) and Yashraj Films. Both sell their music as individual right-holders, not through industry bodies.
In India, royalty is a flat rate charged per hour per station. So if Red FM plays a song in Mumbai, a large advertising market, or Big plays it in Dhule, a very small market, the absolute amount of royalty remains the same. As a percentage, this could range from 7 per cent of revenues for big city stations to 40 per cent for small-town ones. This puts cost pressure, especially on the smaller stations.
T-Series and Yashraj Films bundle free playing time with the deal, leading to an effective discount of 40-50 per cent. This means stations ‘have to’ play the music bought from these companies, especially the latest films for a larger proportion of airtime. That means that even with bad music Thoda Pyaar Thoda Magic, a Yashraj Film, would get more airtime. Such deals leave little scope for variety even within film music.
Indian radio operators love to point to mature markets. In Europe or other Asian markets, royalty is calculated as a proportion of revenues — it is usually 3-12 per cent. In the US, terrestrial radio stations don’t pay any royalties to music companies (cable, Internet and satellite radio companies do). Now the musicians are demanding their share. MusicFirst, an initiative by artists and industry associations, has analysed the trend in music revenues from 1997. It shows that a large proportion of advertising growth in radio companies has come from music formats and not talk-shows et al.
So if royalty costs come down, small-town launches become cheaper but it will not mean more variety. Take the other two reasons — news and multiple frequencies. None of the operators plan on setting up national bureaus or running a 24-hour news operation, a very expensive proposition. They will probably use a news wire service to offer headlines every few hours. The economies of running more than one station per city with the same overheads will allow stations to experiment a bit more. So maybe some variety will creep in.
In any case, most of these issues were addressed by a recent Telecom Regulatory Authority of India (TRAI) paper. So they should get resolved.
Even without variety, radio seems to be doing well — it has grown from Rs 360 crore in advertising to over Rs 600 crore over the last three years. It is one of the fastest growing parts (albeit smallest) of the media and entertainment business.
What radio operators are doing is not significantly different from what general entertainment channels do in the predominantly one-TV, Indian market — cater to the largest possible mass of viewers to start with. In radio, popular music is the best way to get reach and profitability in this phase. In TV, the demand for differentiated content is emerging now, after 15 years of free private television. Radio audiences too need time — once they are sated with popular music they will start seeking talk radio, news and other things.
For now, the true seeker of variety can always tune into Worldspace, the satellite radio service with 39 stations on everything from news to jazz.
Vanita Kohli-Khandekar is the author of The Indian Media Business. She can be reached at vanitakohli@hotmail.com
