FM Radios to Pay Music Royalties to Creators Now: Here’s All You Need to Know

Now, every time you hear a song on the radio, the FM broadcaster will have to pay royalties to the creators of the music.

The Bombay High Court recently upheld the rights of the Indian Performing Right Society Limited (IPRS), a music copyright society, to acquire royalties from private FM radio broadcasters.

What does it mean for the FM radio industry? What are radio royalties? And what makes it a landmark decision for the music creators? Here’s a breakdown:

The Judgment

Justice Manish Pitale of the Bombay High Court, on 28 April, pronounced his judgment on the cases titled IPRS vs Rajasthan Patrika Pvt Ltd and IPRS vs Music Broadcast Limited, agreeing with the contentions of the IPRS.

What is IPRS? It’s a society registered under the Copyright Act, 1957, which legitimises the use of copyrighted music by music users; for instance, FM radio broadcasters.

It issues licences to music users and collects royalties from them on behalf of IPRS members, such as authors, composers, and publishers of music.
Authors and composers are better known as lyricists or writers of music.
Publishers are the music companies or those who hold publishing rights of the musical and literary works.
IPRS distributes the collected royalty among its members after deducting up to 15 per cent of the administrative costs of the society.

As per the judgment, the applicant IPRS members, who were earlier deprived of their rightful claims due to a 2012 amendment in the Copyright Act, are now entitled to acquire royalties from the defendant companies, Music Broadcast India and Rajasthan Patrika Pvt Ltd, who engage in the business of operating FM radio broadcast channels.

Every time a sound recording is communicated to the public through FM radio stations, the authors are entitled to claim royalties for their underlying literary and musical works.
The defendants have been directed to pay royalties to the IPRS within a period of six weeks, or they will be restrained from broadcasting the songs.
The landmark judgment was first announced on 31 December 2020, by the Intellectual Property Appellate Board (IPAB).

The Legal Tussles of the IPRS

The IPRS has been fighting for the rights of the underlying authors of music for years now. Before we go ahead, it’s important to understand the meaning of copyright in context with IPRS:

The official logo of the IPRS.

In simple words, a copyright is the intellectual property of the copyright holder, which grants them an exclusive right to use their creations or grant permission to others to do so in accordance with a set of norms. In the context of IPRS, this intellectual property can be the literary or musical works of the holders.

Before the 2012 amendment of the Copyright Act of 1957, the original authors were not entitled to claim royalty once their original works became part of a film.
The 2012 amendment added provisos (clauses) to sections 17 (first owner of copyright) and 18 (assignment of copyright), and two subclauses to section 19 (mode of assignment) of the act.
The IPRS claimed that, as per the new amendment, the authors are now entitled to claim royalty on their original work.
The defendants argued that since sections 13 (works in which copyright exists) and 14 (meaning of copyright) of the act weren’t amended, just provisos cannot grant a substantive right to the authors.

IPRS Vs East India Motion Pictures Association (1977): This case focused on the copyright dispute between music authors and the producers of cinematograph films.

Prior to the case, the authors were only entitled to claim royalty from film producers for their songs when they were performed in public.
Music authors always complained that they were deprived of earning the profits of their work, while film producers were enjoying those benefits.
The judgment settled the dispute between the two parties.
However, following the judgment, technological advancements like ringtones and caller tunes came as a hardship for the music authors, which led to the 2012 amendment of the Copyright Act.

IPRS Vs Entertainment Network India Limited (ENIL): In 2006, IPRS filed a case against ENIL, which owns Radio Mirchi, with the following allegations:

IPRS claimed that ENIL had entered into agreements with the society for the broadcast of music in seven cities in India.
However, ENIL began broadcasting in three new cities in India without obtaining the licence from IPRS.
This amounted to an infringement of the public performance rights of IPRS.
However, the Delhi High Court on 4 January 2021, altered the momentum of IPAB’s 2020 decision in its judgment, favouring ENIL.

The Bombay High Court further pronounced in its judgment on 28 April 2023:

The court rejected the claim that the right to collect royalties cannot be recognised as copyright under the law.
It was rather asserted that the right to royalty emanates from the copyright held by the authors in their original works.
The court announced that the 2012 amendment substantially altered how the rights of original creators were treated.

What Are Radio Royalties? Why Are They Paid?

Although ‘royalty’ has not been defined under the Copyright Act 1957, the Income Tax Act 1961 defines royalty as the consideration (including lump sum payment) for the transfer of all or any rights, including the granting of a licence in respect of an invention, patent, secret formula, process, trademark, model, design, literary, artistic, or scientific work.

In simple words, royalties are payments to the copyright owners made by the user in exchange for the right to use, broadcast, or communicate (in this case) their music to the public.
These royalties are administered by numerous copyright societies like the IPRS, the Indian Singer Rights Association (ISRA), Novex, and Phonographic Performance Limited (PPL).
Not all artistes are part of a copyright society; however, most artists prefer to be a part of one since individual administration to acquire royalties is quite complex.

The IPRS follows a distribution plan for the collection and administration of royalty payments.

It collects royalties from a variety of sources, and the amount collected varies depending on the mode of broadcast.
Distributions for the revenues earned in the previous fiscal year are typically made quarterly (four times a year): in June, September, December, and March.

How does IPRS calculate royalties? The royalty or licence charges, which are usually payable annually in advance, are calculated by IPRS under a series of tariffs depending on the several categories of premises and classes of entertainment.

IPRS collects royalties on a per-play basis.
It grants a blanket licence to the radio stations, which gives them access to the copyright holder’s entire musical catalogue for a predetermined period of time.
Music is licensed to radio broadcasters on a per-station basis.
The licence fee differs depending on the type of city, which is typically divided into five categories depending on the population.
An A+ city refers to metro cities like Mumbai, Delhi, Kolkata, and Chennai, whose licence fee will be higher than a D-category city, which is a small town.

The minimum annual royalty fee structure.

The annual minimum royalty charge for an A+ category city amounts to Rs 17,00,000.
The gross revenue of a radio channel in a metro city is Rs 3,50,000, as declared to the Government of India.
The licence fee is based on the applicable rate of 5 percent of the gross revenue of a radio channel.

A Win For the Underlying Authors of Music

The Bombay High Court’s decision has turned out to be a landmark judgement for the underlying authors of music, who were earlier deprived of their right to royalty. Music lyricists, composers, and authors celebrated the new judgment across social media platforms.

Javed Akhtar, Chairman of IPRS, shared in a media statement, “I am delighted that the honourable Bombay High Court has seen fit to uphold and protect the rights of authors and composers whose creations have enthralled and inspired Indians and the world for decades. This is long due especially since Indian music has reverberated across the world including ‘Naatu Naatu’ composed by M M Keeravaani and authored by Kanukuntla Subhash Chandrabose.”

“All the authors and composer members of IPRS thank the Bombay High Court for this landmark judgement and its well-reasoned analysis recognising the change in the law since 2012. This forward-looking and exemplary judgement places the creator back at the heart of copyright creation which will serve as a great incentive for artistes, the music industry and for the creation of copyright in India,” Akhtar added.

Here are some other reactions from the music industry: