AROI: Resolve music royalty fee issue before commencing Phase III radio licensing

By Sangeeta Tanwar , afaqs!, New Delhi | In Media Publishing | August 25, 2009
The Association of Radio Operators of India (AROI) is in favour of a revenue-sharing model, to settle the long-standing feud between music companies and radio operators over payment of music royalty fees

The long-standing tussle between radio stations and music companies, concerning music royalty fees, has been one of the most widely debated issues in the radio industry.

The matter is now in a court of law and the verdict is expected to have significant ramifications on most radio operators' bidding approach for Phase III radio licensing.

In conversation with afaqs!, Apurva Purohit, chief executive officer, Radio City and president, Association of Radio Operators of India (AROI) shares, "The government's progressive and pro-reform policies, as part of discussions for Phase III radio licensing, are welcome. What we feel is that before embarking on bidding for Phase III radio licensing, it would be appropriate to first sort out and settle the music royalty issue."

Since the matter is sub judice, Purohit was cautious in sharing details of recommendations and expectations of radio operators. However, she informs that the industry body is in favour of a revenue-based model when it comes to paying the music royalty fees, in place of the existing fixed- fee model.

Policy changes such as multiple frequencies, coverage of news and current affairs and increase in FDI, as part of Phase III radio licensing, have been welcomed by the radio industry. However, Purohit points out that radio stations, whether in large cities or smaller places, have to pay huge amounts as royalty fees, which is proving detrimental to the survival and profitability of the business.

It is learnt that radio operators end up paying anything between Rs 65-90 lakh per annum as music royalty fees. This turns out to be detrimental for radio stations in Tier 2 cities, where revenue streams are not as robust as in bigger cities.

At present, a broadcaster in Nagpur or Sikkim pays the same for music as a broadcaster in Mumbai or Delhi. What disturbs the radio industry is that there is no gradation of royalty fees based on the size of a city.

This hugely affects the profitability of broadcasters in smaller cities.

AROI holds the view that high royalty fees will deter players in the industry from participating in Phase III bidding, as most of the players would find it unwise to bid unless the royalty issue has been resolved.

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