Is there a need to break up the cartels in the radio – music labels negotiations?

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One of the biggest Indian copyright litigation cases in the last decade has been the compulsory licensing battles between the radio and music industries. The newly founded private radio stations, in 1999, had wanted access to music and could not agree with the music labels on a reasonably royalty. 

One aspect of this litigation which intrigued me is the negotiating positions adopted by both sides. In the two rounds of litigation before the Copyright Board, the radio stations have made almost identical demands; in the first round radio stations were ready to pay about Rs. 190 per needle hour and in the second round, all the radio stations with the exception of Radio Mirchi, were offering between 0.1% to 2.5% of net advertising revenue. What I find striking about this negotiating strategy is the almost co-ordinated offers made by the radio industry. Is such co-ordination and collaboration within the bounds of competition law or would it constitute cartel-like behaviour? Shouldn’t these radio stations be in competition with each other and offer competing rates depending on their location? Can a radio station in New Delhi be allowed to licence music at the same rate as the radio station in Jabalpur? Isn’t that what competition is all about? Should the radio stations not offer to pay different for different genres of music? If not, we will have situation where all radio stations will be playing the same music and the customer suffers because there is no diversity in music offered by these radio stations. 

Things are no better with the music labels, most of whom made a joint offer through the window of PPL, the copyright society for sound recordings. In the first round PPL offered to licence music at Rs. 1,500 per needle hour and in the second round PPL offered to licence music at Rs. 2,400 per needle hour or 20% of the net advertising revenue. For those of you familiar with PPL, it has over 160 music labels as members. How can all 160 members offer a joint licence without falling foul of the restrictions against cartels in competition law? The music labels are a cause of much greater concern than the radio stations because there is a lot of diversity in the repertoire of the music labels. I don’t think the music label ‘Venus’ can demand the same kind of royalties as ‘Saregama’ and in such a scenario if both companies were to offer individual licences, the radio station in question may feel inclined to pay for only one of the music labels while junking the other music label. But now, given that music labels are engaging in collective bargaining the radio stations have pretty much no choice while dealing with the music labels. 

Let me also clarify that it is not my case that PPL should not be allowed to offer a blanket licence. Instead it my case that apart from offering a blanket licence, each player at PPL should be forced to offer individual licences and they obviously cannot be valued at the same level. How does this make a difference? Not only does such information make it easier for the Copyright Board to calculate, the royalty rates in a case of compulsory licence or statutory licensing but it also given the radio stations the opportunity to negotiate with only certain music labels. As things stand now, they simply do not have that opportunity. 

The millionaire dollar question is whether an issue like this will ever crop up before the Competition Commission of India before the next round of compulsory or statutory licensing litigation starts before the Copyright Board. There is already some litigation between HT Media and T-Series before the Competition Commission but I’m not sure of the scope of this litigation.