Ever wondered if T-Series or Sony Music can make a copyright claim, or charge a fee, for that Arijit Singh song a certain contestant on Indian Idol or India's Got Talent sang? Turns out they can, and they do.
In fact, music labels are now mulling an increase in the fees for dance and music-based reality shows for the use of their songs. Performances by reality TV contestants also help boost revenues from digital platforms, with re-runs of their performances or their covers of popular songs available for streaming on YouTube, Spotify, Gaana, and leading OTT platforms as well.
Speaking to Business Standard, a senior executive at a leading music label (who did not wish to be named) said, "You must realise that music labels invest a lot not only in identifying and grooming music talents but also in arranging the right choreography, sets and promotional vehicles for independent albums and singles, as well as film-related music releases. There's also the high cost of production for music videos." Moreover, the executive pointed out, labels are increasingly making a large chunk of their monthly revenues from digital platforms.
Karan Taurani, SVP at Elara Capital, explains that for a music label, nearly 80 to 85 per cent of the royalty would come from digital platforms. And then, the balance royalty is derived from other avenues like live performances, radio, TV, and everything put together. "I think it's very logical that, because they are facing pressure in terms of royalties on the digital side, they will ask the television broadcasters for higher royalty," Taurani says.
For the broadcasters, 40 to 50 per cent of their overall revenue is spent on their overall content cost, say experts. "And within this, I think the music royalty amount would be a very small portion, no more than 30 to 40 crores," says Taurani. Experts believe that broadcasters will eventually have to agree to pay a higher royalty without incurring a major negative impact.
However, pundits also argue that reality shows are not easy to put together. An executive at an Amritsar-based broadcast network told Business Standard that the standard cost outlets of putting together a reality show include buying or renting royalties from music label, scouting for the right talent, hiring major celebrities as judges for the show, setting up digital voting counters and more. Each of these verticals, he said, could incur a cost anywhere between Rs 5 to 10 crore.
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When it comes to the licensing deal for using with music labels, the broadcast network executive said broadcasters buy a "catalogue license" for the use of a bouquet of music offerings (including singles and albums) for a variety of shows. The license is bought at a fixed fee.
Moreover, as with the music labels, most TV networks are also rapidly building their digital footprint, having launched their own OTTs. And this has led to additional licensing revenues to cover digital as well. Thus, while the debate between labels and broadcasters has been a longstanding one, the shift to digital has become the latest bone of contention in the debate on who incurs a higher cost.
With an increase in the royalties, music-based reality shows will find it more difficult to last beyond a single season, the executive said.
Perhaps now, with licensed music getting costlier, contestants will be encouraged to bring in their own compositions to the competition, a phenomenon quite common in US and UK reality TV.