FM radio vs Music industry: a TRAIng story

Radio junkies among SpicyIP’s readers may have been following reports of TRAI’s recent proposals closely. Among these include allowing news broadcasts on FM radio, higher FDI in radio channels, district-level FM radio licenses and more than one channel per broadcaster in a district.

There’s a copyright/royalty angle to this story that has not received the attention it deserves. Soma Das at FE focuses on the issue in this piece. Das says that the proposed switch from city to district licenses will have dire implications on the relationship between private FM radio broadcasters and the music industry in re royalty payments.

FM broadcasters welcomed the Trai recommendation—which will expand their reach—but they fear the music industry might act as a spoiler by not rationalising the royalties. But the music industry claims that if the listener base grows so will the ad revenues, a part of which they are entitled to get, by right.

From what I gather, Phonographic Performance Limited (PPL), the copyright society representing the music industry, plans to raise its royalty charges by an exponential factor, correlative to the increased audience base of the radio channels.

PPL seems to be throwing some weight around by asserting that as an independent copyright owner, the body ought to have the right to decide on what should be the geographical basis of charging royalty, exclusive of government’s boundary demarcation for transmission.
(On a distantly related note, recall a recent SpicyIP post by Prashant on PPL going into overdrive over public performance licenses at New Year parties)

Vipul Pradhan, CEO, PPL, says, “We will watch how government clubs towns and cities for transmission and then decide. Currently we are charging the rate decided by the copyright board under the jurisdiction of the ministry of human resource development. But the current rates have not been reviewed for seven years. Even inflation has not been factored in.”

My take: a seven-year revision of rates seems reasonable. But to justify a blanket tariff-rise on grounds of an increased audience base appears irrational, for it’s clearly a case of wanting a share of a pie that has not even been created yet! This is especially so in context of private FM broadcasters struggling to break-even in most ventures (of course, THAT in turn is attributable to poor marketing, not leveraging on niche audiences, poor content selection, etc. – e.g, ever wondered why all 5-10 channels in your city play the same songs?).

Of course, we shall wait and listen to see what comes of this. Something tells me that in all of this, we might be forgetting to analyse whether private FM is indeed the way to go, or whether the new community radio policy (post 2006, downloadable here) might create the waves (sic) it was thought to…