Eradicating the anomalies of the revenue sharing model between private FM players and the music companies, the copyright board has fixed 2% of the net advertising revenue as the royalty paid by radio stations to all music providers. The new step has paved the way of bringing country's royalty system inline with International standards.
Till yet, the royalty charges were inadequate and were applicable irrespective of the size of the region. This compelled private FM players to pay high rates even in those areas which are not considered sound on the front of revenue generation.
But this new rule has brought a sigh of relief for the private radio players as the last Copyright order was passed in 2002 when private FM was available only in 12 cities. However, the rule will dishearten the music companies who are already struggling with legal issues on economic front.
In May 2008, the Supreme Court had authorized the Copyright Board to decide on the royalty rates for the industry. The Copyright Board had asked the radio and music companies to file evidence supporting their stand on the royalty issue earlier this year.
This new directive will help Radio stations save a significant amount of revenue and provide a boost to the third phase of auction of radio stations which will make this industry more viable economically.