Compulsory licensing of sound recordings is practiced in different countries, though the trajectories and rationale for arriving at this framework may differ. Developing countries often introduce measures to protect “infant” industries, but policy persistence can make subsequent changes hard. In 2010, the Copyright Board of India passed an order prescribing 2% of net advertising revenues to be paid by radio stations as compulsory license fees to copyright owners, citing the infancy of the private radio industry and the lack of access to music in India. Since the original order, the private radio industry has matured in size, coverage and listenership. Access to music today is facilitated through a far-reaching radio network, as well as widespread mobile and internet usage. The original order will be reviewed in September 2020.
The immediate issues that arise from this order include lack of clarity who the order applies to, a potentially short-sighted approach through subsidizing the radio industry at the cost of the underlying music industry, and a long lock-in period that fixes the rate despite advancements in broadcasting technologies. The radio industry has grown in revenue at an annual average of 15.6% over the past decade. Companies have expanded into new distribution platforms and revenue sources such as online platforms and YouTube, and can be expected to benefit from digital transmission, which allows multiple stations to be broadcast on a single frequency.
With a large number of private and public radio stations that together cover 92% of India geographically and 99% of the population, access through radio has arguably been achieved. In addition, consumer surveys show listeners have affordable access to music via the internet on smartphones.
Given the advancements since the original order, the main recommendation of this paper in the review by the IPAB that is coming up in September 2020 is to aim to determine the fair market value for music in the Indian market and try to achieve the “efficient” outcome. These cannot be currently determined due to lack of data in the public domain, but the regulator can calculate this with data requested from the radio broadcasters and applying strategies described in the past literature for countries with mature markets. Any positive or negative spillovers from the radio industry in terms in of exposure and substitution as well as on the diversity of content can be then be incorporated to adjust the initial allocations.
Attribution: Review of Economic Research on Copyright Issues, 2020, vol. 17(1), pp. 60-77
Note: This paper, published in the RERCI, is shared here with the author’s permission, who is a Fellow at the Esya Centre. It is not a co-publication.