Intellectual Property Appellate Board order fixes statutory licensing rate for radio royalties

The Intellectual Property Appellate Board (IPAB) on December 31 passed an order fixing statutory licensing rate for radio royalties.

The order was passed after 10 applications were filed by Music Broadcast Ltd. and other radio broadcasters before the Intellectual Property Appellate Board seeking statutory license under Section 31D of the Copyright Act, 1957, read with Rule 31 of the Copyright Rules, 2013, to fix royalties for communication of sound recordings to the public by way of broadcast through radio.

“The provisions of Section 31D are meant to ensure that the economic benefits of the Copyright Owner are not diluted in any manner and there is no inroad of any nature whatsoever on the rights of the Copyright owner as conferred by the Act. The Broadcasters are entitled to broadcast the copyrighted work by making a payment of royalty at the rate fixed by the Board. A rate of royalty after considering the factors laid down by the Rules. Thus, the provisions of the sections achieve a balance between the economic rights of the owner of the copyright and the entitlement of the broadcasters to have access to the work by making a payment of royalty at a rate which ought to be in consonance and conformity with the other economic rights conferred by the Act,” 

noted the Board in its 234-page order.

The IPAB having regard to the fact the royalty rates proposed were lesser than rates fixed by the Copyright Board 18 years ago, but significantly higher than rates fixed by the Copyright 10 years ago, observed that the proposed rates were fair for both music companies and radio broadcasters, and seeks to achieve a harmonious symbiotic relationship between the concerned parties.

The board further observed that

 “the royalty rate of INR 1050 at the TIER A+ peak time from the point of view of music companies should be satisfactory as it roughly 9% of NAR based on 2019 financial data of Broadcasters, which is far higher than 2% erstwhile received by them and even higher than 7% NAR demanded by some of the music companies in this proceeding. Similarly, the Applicant Broadcasters should also be satisfactory with the current lower royalty rate range of INR 1050 (TIER A+ Prime Time) to INR 15 (TIER D Lean Time) as they have earlier paid INR 1200 (For SCPL) to the lowest INR 230 (2% NAR).”

The Board said that the royalty rates fixed for broadcasting sound recordings payable respectively for the sound recording and for the underlying literary and musical works as envisaged under Section 31D will come into effect from October 1, 2020.

The board further directed that the radio broadcasters have to pay the arrears of royalty to the music companies on or before February 10, 2021 for the period of October 1, 2020 to January 31, 2021. As far as royalty fixed by the board for underlying works of sound recording is concerned, the same shall be distributed as per the amended provision of proviso 3 and 4 of Section 18 and 19 of the Act.

Further with regard to receipt of royalty from the broadcasters pertaining to sound recording which has been fixed the board, the broadcasters shall pay the same to PPL on behalf of their members, rest of the same shall be paid directly to the respective parties. Similarly, the share of author and composer fixed by us for underlying works shall be fixed by IPRS on behalf of the authors and composers being members to be paid. The non-members of the IPRS shall be entitled to receive the royalty directly from the broadcasters.

The radio broadcasters have to comply with Rule 29 of the Copyright Rules, 2013 to obtain statutory license from the music companies, by giving advance notice to the owner of the copyright along with an advance payment as per the above royalty calculation with effect from February 1, 2021. The same notice copy has to be sent to the Registrar of Copyrights for records, said the Board.

Considering the peculiar circumstances till 30.09.2021, the Board directed all the broadcasters to deposit 25% (twenty five percent) as advance amount under the compliance of Rule 29, subject to adjustment of amount every calendar month.

As far as regional songs and small broadcasters having one or two radio stations having total gross income of less than Rs 10 crore, they are free to negotiate with the music companies under Section-30 of the Act as per earlier practise either to play in lump sum or as per terms and conditions decided by them.

The royalty rates shall be reviewed by the Board as per Rule 31(9) at the end of the said period either suo moto or on the application by any interested person.

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The order has been passed by a bench led by the Chairman Justice Manmohan Singh, N. Surya Senthil and S. P. Chockalingam (Technical Members Copyright).