MUMBAI: They have been sparring for a couple of years, waiting for the referee to reach a decision. Today, the Copyright Board reportedly announced that it had recommended  that the royalty payable by FM radio stations to  the Indian Music industry would be a share of 2 per cent of net advertising revenues, a departure from the current practice 

Currently, the arrangement is that FM radio stations  pay music labels on a per hourly basis for music played out on  air. This is fixed at  Rs 850 per hour irrespective of the geographical region. Of this,  Rs 660 per needle hour is  collected by the Phonographic Performance Ltd (PPL). The government had  fixed the tariff in 2001 with no rate revision since then.

The FM radio broadcasters coughed out Rs 1.2 billion, or 18 per cent of their net ad revenues, as music royalty in FY'10, according to industry estimates. A two per cent share, as the Copyright Board has directed now, would mean the music companies would have taken away just Rs 140 million in FY'10.

Earlier this year, the Supreme Court had given the Copyright Board four months to resolve the music royalty spat. It had asked both the radio and the music fraternity to file evidences supporting their stand on the royalty issue.

Experts from the industry believe that the order is skewed in favour of  radio and the FM industry is not complaining. Says a radio industry insider, "The move will definitely be welcomed by the radio industry. It is an encouragement and will  push it to the  next level. especially since phase III is on the anvil."

Big FM business head Soumen Ghosh Choudhury said, "We haven't received any official communiqu?© on this from the Copyright Board as yet and hence need to understand it  clearer. But prima facie it does seem like a very positive move. Music royalties have  been an issue for a while now and this is sure to bring US some respite. If the music royalty issue is really  sorted out, it will further fuel phase III growth for FM  and allow broadcasters to deepen their footprint while offering advertisers greater reach."

BAG Films and Media CMD Anurradha Prasad: "The music royalty cost used to be a huge drain. A two per cent revenue share will actually be a big help for radio broadcasters in smaller towns who were burdened with a heavy payout to music companies."

Music  labels refused to comment on the new settlement since they still hadn't  received the order from the Copyright Board. Talking to Radioandmusic.com South music label Inreco's director SL Saha said, "Since we haven't received the order we are not in a situation to comment. But prima facie we are not too happy with the settlement."

Keep watching this space for further developments.