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Copyright amendment a shocker, but smaller FM stations resort to less talk for survival

Copyright amendment a shocker, but smaller FM stations resort to less talk for survival

Author | Robin Thomas | Thursday, Dec 10,2009 8:32 AM

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Copyright amendment a shocker, but smaller FM stations resort to less talk for survival

The music royalty issue continues to worry FM stations, especially the smaller FM stations or those in small towns, and going by some of the industry players, the recent proposal to amend the Copyright Act gives unfair powers to the music societies to fix tariffs and is also said to have been made to the effect that till the time the compulsory licenses are granted by the Copyright Board for airing the contents, (which generally takes a very long period of eight to ten years), the broadcaster would be required to pay the amount demanded by Copyright Societies, owners, lyricists and music companies which is not seen in good light by broadcasters. The fear is also that this amendment will only allow the music industry to demand more music royalty.

The radio industry alone is estimated to pay as much as around Rs 100 crore a year as per the copyright board order which constitutes around 15-18 per cent of the revenues of the FM Radio operators while in case of smaller cities they are nearly 70- 80 per cent of the revenues and in some cases higher than the revenue generated.

What is also interesting to note is that small town FM stations are increasingly resorting to less music by including audio plays, guest talks, involving more listeners and other fillers which is seen necessary for survival. Tomato FM and Radio Choklate for instance have taken this route.

exchange4media spoke to some industry players to find out how small town FM stations are dealing with the unending music royalty issue and whether the recent proposals of the Copyright Amendment Act have altered their Phase III plans.

There is a limit for sustainability

Harrish M Bhatia, COO, My FM (Synergy Media Entertainment Ltd), explained, “The radio industry alone pays out as much as about Rs 100 crore a year as per the Copyright Board order, which constitutes around 15-18 per cent of the revenues of the FM radio operators, while in case of smaller cities, they are nearly 70-80 per cent of the revenues and in some cases higher than the revenue generated. This makes the FM business unviable. Thus, the proposed Amendment would add to the woes of the radio industry, especially to those operating at smaller stations.”

Naval Toshniwal, CEO, Tomato FM, added here, “We were hoping for some positive outcome for the music royalty issue. Rather than taking us a step ahead, this proposal has now put us ten steps behind, as a result, the IPRS will again come into the picture and they would emerge stronger because now they have an amendment in their favour. There is a limit for small town FM stations to sustain for probably another year, but what about the future?”

“There is no revenue potential in small towns, where the royalties paid by FM stations in small towns are the same as what the FM stations are paying in the metros, the rates are not differential. So, there has to be some amount of rationalisation which has not happened, and rather this has taken the radio industry on a backfoot altogether,” he further said.

How they deal with this

Monica Nayyar Patnaik, Director, Eastern Media Ltd, noted, “Some of the steps taken to reduce the music content is by filling in a lot of sparklers, for instance, there are audio plays which are aired for one hour, and for every hour there are four to five sparklers of one minute each, then there are a lot of guest shows and weekend programmes, for example, audio plays like ‘Choklate Rang Manch’ are aired for one hour. We have to resort to these things otherwise it would be difficult to survive.”

Toshniwal pointed out, “We have already started contemplating on different formats now other than music format, and if we have to survive, we will have to play less music and if we have to play less music, then we need to figure out ways to keep listeners hooked on to the FM station. Thus, less music, more involvement of listeners will be the key. In the last three months, Tomato FM has already cut down its music percentage by almost 20 per cent, so we have got in more characters, more segments, and we do a lot more outdoor broadcasting. So, our on-air time for radio jockeys have gone up, we have begun to take a lot many people on air so that we play less music on air.”

On a different note

On the other hand, Prashant Panday, CEO, ENIL, explained, “I think the Amendments to the Copyright Act are long overdue. We obviously don’t know for a fact what the proposals are, but assuming that they will be contemporary, we support the Amendments. I am hoping that artists are protected in the Amendments. They are the reason for the music industry to exist and we must do all to encourage them and monetarily support them. The music companies must share their royalties with the artists.”

“We also hope that the amended Act will make life a little easier for broadcasters. For example, we are made to run from pillar to post seeking licenses to broadcast. I hope that can be avoided in the future. I also hope the lopsided power equation in favour of the music industry is corrected. We operate under a license from the Government of India, how can we be treated in such a shoddy manner? We are not infringers. We pay more than Rs 100 crore to the music industry, how can we be infringers? I also hope the Copyright Board can be made a permanent body just like the TDSAT. Today, music and movie content is used widely and we need a judicial authority that can resolve litigation quickly. Overall, I look forward to the Amendments to bring fairness to the entire system. Royalty rates become reasonable, music companies pay artists, and everyone gains,” Panday added.

According to Bhatia, “The Indian Broadcasting Foundation (IBF) has criticised the Human Resource and Development (HRD) Ministry’s proposed Amendments to the Copyright Act 1957. Though we are pro-artist and want that the artist should benefit for the work done by him, but the proposed Amendment would not help the artist as such and is more beneficial to the music companies only, thus we will protest against it and we will talk to our members in IBF and AROI on our further move. Also, as the Copyright Board is already conducting the hearings for royalty disputes, it is here that we can try to convince the Ministry of HRD to pass appropriate instructions to the Board to expedite the proceedings or at least to fix a timeframe for completion of proceedings.”

The impact on FM Phase III

Toshniwal of Tomato FM admitted, “It will affect our Phase III plans. Even if there is bidding, the value will drastically go down this time, which will be a loss for the Government ultimately. Thus, we expect the Government to take us seriously and find a solution to the problem.”

Bhatia of My FM added here, “The current royalty rates are very steep, especially for stations in the smaller markets (BCD), which makes it an unviable business proposition. If the proposed Amendment is approved and is enforced, we are going to see a huge dip in enthusiasm levels for Phase III bidding as the revenues generated are already very less and bidding for those stations means incurring huge capital expenses, which after implementation of the proposed Amendment, would become more difficult to realise. Today, even existing players are finding it difficult to consolidate operations.”

Patnaik stated, “We are a state player, and for the upliftment of the state and to maintain the pride of the state, we will participate in Phase III.”

As compared to international markets, where radio stations pay between 2 per cent and 4 per cent of revenues as music royalties, the demand for music royalty in India is around 30 per cent. What is also seen as an urgent need by FM players is for proper regulation of Copyright Societies and their operations and the need for a single body representing the music industry to ensure that the royalty paid reaches the correct IPR owner.

“We are seeking a gradual increase from 1 per cent of revenues to 4 per cent as radio listenership improves. Can the amendments at least nudge the collection societies in this direction?” asked ENIL’s Panday.

Also read:

IndustrySpeak: Copyright Act amendment: Broadcasters irked about not being consulted, FM players call it ‘draconian’

FM players fear death knell for biz if music royalty issue not resolved soon

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