Monday, July 27, 2009

High royalty fees continue to haunt FM radio industry in small towns

The going is getting tough for the FM radio industry, especially in smaller towns, due to the royalty rates paid by them.

The FM radio industry is currently paying around Rs 75 lakh -100 lakh per annum as royalty fees. This is 20% of the total station revenue as music royalty fee, whereas internationally the fee is relatively low. The FM radio industry is represented by the Association of Radio Operators in India (AROI) and there is no organisation representing the entire music industry. The Supreme Court, in its judgement on May 16, 2009, said that the Copyright Board would decide on royalty rates for the industry. The FM players and the music industry is waiting for the Copyright Board hearing scheduled on July 28 and is quite hopeful for a positive solution.

Apurva Purohit, president AROI and CEO, Radio City 91.1 FM said, "The royalty fee in large and small cities is the same and there are multiple bodies who claim the copyright ownership for the music. This is not viable for radio operators, especially in smaller towns. We have proposed a revenue share rate of 0. 25 % to 5 % for different radio stations, which should be based on their advertising revenue potential. A favourable verdict on the music royalty issue will further help in the growth of the radio industry in India, especially in non-metros."

The ministry of information and broadcasting and the HRD ministry have also expressed their interest in resolving this dispute. Moreover, Purohit feels that a lot more needs to be done to resolve this dispute, which is critical for the development of private FM radio industry in the country..

The FM radio industry expects that with phase III round the corner, multiple frequencies, broadcast of news and current affairs, increased foreign direct investment (FDI) and networking will be additionally allowed to the stations. In phase III, further deregulation and changes in policies for the stations will be allowed by the government.

"In phase III, it is expected that several frequencies will be available for bidding especially in smaller towns. This inadequate share of royalty rates will be the single cause that will hold back the radio industry from bidding for the new frequencies," added Purohit.

However, if this issue is not resolved, many of the smaller operators will have to close their business and none of the FM players will be further interested...

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