Though the private radio industry and the music industry are dependent on each other — radio needs music as content and people who buy music do so mostly after discovering it on a medium like radio — they are terribly out of sync. Worse, each regards the other as a predator and frequently accuses it of avarice and unfair practices.

“Solely on account of music royalties, the expansion of radio in India is being held hostage,” says Prashant Panday, deputy CEO of Mumbai’s Entertainment Network India (ETN), which runs Radio Mirchi. He is outraged despite Radio Mirchi having signed a nine-year deal to source music from the country’s biggest music company, Super Cassettes Industries (SCI), which owns the T-Series brand. Panday says that in B, C, or D category towns, royalty is the biggest operational expense for radio companies. Depending on how informal talks with music industry bodies such as Indian Performing Rights Society (IPRS), Phonographic Performance (PPL) or independent music companies pan out, that cost could work out to as much as Rs 80 lakh-90 lakh per year.

IPRS collects royalty on behalf of lyricists and music composers, while PPL collects royalty for a large number of music companies, including Saregama, Sony BMG, and Universal Music. Panday’s calculations are based on payment of an average Rs 660 each to IPRS and music companies for every hour of music played on FM stations. Typically, radio stations play 15-18 hours of music a day. Though this rate was prescribed by the Copyright Board of India for compulsory licensing of music by broadcasters, it has become the benchmark rate for voluntary or negotiated licensing too.

“This is even higher than the government’s licence fees in phase I,” Panday says, pointing to the annually escalating licence fee demanded by the government till 2005, which led to the charges becoming higher than radio companies’ revenues. The government has since shifted to charging the radio companies 4 per cent of their gross revenues. This was in keeping with the government’s stated objective of allowing the private radio industry to become profitable. “So, the music industry is killing the goose that gives the golden egg. It is challenging the government’s will too,” he asserts.