IMI hopes the recorded music industry can receive a uniform royalty from Radio of 7% of net ad revenue

Valuation-recordings-radio-broadcasters-increase-to-7-IMI.jpg

September 30th will mark the end of a 10-year era where the Copyright Board fixed a royalty rate under Compulsory Licensing for Private Radio Broadcasters payment to music labels whose Radio licensing mandate at that time was with PPL, and as that milestone approaches, the Indian Music Industry (IMI) the apex body that represents the trade and economic interests of the recorded music industry is hoping that its member labels and entities can receive a uniform royalty from Radio of 7% of the medium’s net ad revenue.

Instead of the small sum of INR 75 Crore of royalty fees received by IMI members in the last year, they seek a minimum net total of Rs 300 crore a year. This expectation is tied with ten years of niggardly ‘royalty’ fees forced upon the recorded music industry by the misguided and overzealous team that drafted the Copyright Act amendment that cocked a snook at the risk and investments of each music label producer, small or big, and decreed the quantum of royalty. Done and dusted.

Ten years ago, the rate was fixed at 2% of the net advertising revenues of the private radio broadcaster as a fee for radio operators to broadcast the sound recordings produced by the music labels.

Even a decade ago, the 2% rate was extremely low and quite akin to an aggressive restriction on the freedom of music labels to conduct business, because Radio operators seemed to want the music tracks produced by labels at their own risk, for, pardon the unfortunate pun, a song.

The rationale of the extremely low rate was that the private radio industry was in its infancy stage. At present the radio industry’s turnover is pegged at Rs 3100 crore vis-à-vis the recorded music industry in India turnover at Rs. 1277 crore.

Members of The Indian Music Industry, aka IMI, the apex body that represents the trade and economic interests of the recorded music industry,  have noted with interest the interim progress that has been made based on public filings of a few major radio broadcasters — the royalties paid by them to the entire music industry for sound recordings averages around 5% to 7% of their net advertising revenue in the past 3 years.

This includes the monies paid to the music labels whose radio licensing was done by PPL and those labels who were licensing directly.

image-Kumar-Taurani-Managing-Director-TIPS-MediaBrief.jpgKumar Taurani, Managing Director, TIPS, said, “It is gratifying to note that the valuation accorded for sound recordings by the radio broadcasters is way above the 2% benchmark; there is hope for us to reach an accord with the radio broadcasters and avoid unwarranted litigation.”

image-G-B-Aayeer-Managing-Director-PPL-MediaBrief.pngG B Aayeer, Managing Director, PPL, which represents a cluster of micro and small labels, says, “If the royalty rates are not in par with today’s market realities there is every likelihood of these micro and small labels going out of business. This cluster of labels besides being employment generators are the custodians of our music culture.

“For sustenance the royalty rate should be pegged at 7% of net advertising revenue and the law should ensure that there is no disparity in the marketplace where some labels who are not covered by the court ruling get a higher royalty rate and those covered under a court ruling are getting a lower rate,” Aayeer added.

image-Vikram-Mehra-Managing-Director-Saregama-MediaBrief.jpgVikram Mehra Managing Director, Saregama, said, “Free market economics is a win-win situation for all stakeholders. I am optimistic that we will be able to sign a voluntary license with the radio broadcasters.

“We have a rich and diverse repertoire cutting across the whole country and melodies that cut across all age, fair value is our only ask from the radio broadcasters,” Mehra added.

image-Rajat-Kakar-Managing-Director-Sony-Music-India-MediaBrief.jpgRajat Kakar, Managing Director, Sony Music India, said, “India is fast becoming a key player in the global music industry. Music from home-grown artists is finding increasing success across the world, whilst global artists are discovering new fans and more opportunities here in India – all of which has encouraged more investment and growth in the country’s creative economy.

“As such, we hope to see fair value remuneration for the content of domestic and international artists on all platforms, including Radio, to help drive growth and realise the ambition of making India a top 10 market globally.” Kakar said.

image-Blaise-Fernandes-President-of-IMI-MediaBrief.jpgBlaise Fernandes, President of IMI, said, “Music Content is the fuel that drives the radio broadcast industry, a bench mark is TV spends around 20% of its budgets on content creation and the risk lies at the TV networks door step.

“Unlike in radio broadcast the risk lies with the labels and radio stations cherry picks the hit songs and every green songs, given that this is a risk free model the label revenue pool from radio broadcasters for the recorded music industry should be around Rs. 300 cr per year that will be the Atma Nirbhar moment of our recorded music industry,” Fernandes added.

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