How IPRS is upping the royalty game with its Facebook-Instagram tie-up

What IPRS does

IPRS represents artistes, including composers, lyricists, and music publishers (music companies). Singers aren’t part of IPRS because the Indian Singers’ Rights Association (ISRA) covers them.

The association collects royalties on behalf of artistes who are its members each time their music is played, be it over the radio, live concerts or music OTTs. It had 4,646 members as of March 31, 2019, comprising  3,796 authors and/composers and 850 publishers.

IPRS has seen significant growth in its membership in recent times. The number of new members shot up 299 percent in 2018-19 from FY 2016-17.

A new lease of life

According to a 2012 amendment in The Copyright Act, 1957, every time an artiste’s work is used, 50 percent of the royalty will go to the artiste and the other 50 percent to the music company that has produced the music.

This is what IPRS has been doing over the years but more actively since 2017. In fact, after being re-registered as a copyright society in 2017, it sent letters to all media platforms, asking them to ensure that artistes are paid 50 percent of the royalty, as required by the Act.

Under the Copyright Act, IPRS can file both criminal and civil suits. One landmark case in 2019 saw it accuse Yash Raj Films of collecting Rs 100 crore as royalties from IPRS members. The matter was handed over to the Economic Offences Wing (EOW). An FIR was filed against YRF on charges of criminal breach of trust, along with sections of The Copyright Act.

Royalties rising

While growth in royalties collected by IPRS is rising gradually CEO Rakesh Nigam, in a chat with Moneycontrol, said what is encouraging is that there is growth at all.

A  look at the last three years shows that there has indeed been a significant increase in royalties collected by IPRS.

“In FY2017-18, we collected Rs 45 crore and the number increased to Rs 166 crore in FY2018-2019. And in FY19-20 we collected Rs 170 crore. The number should have been higher in the last financial year but since March everything has come to a standstill, impacting royalty collection as well,” said Nigam.

According to their 2018-19 annual report, major contributions came from music streaming platforms at Rs 56.2 crore, while Rs 51.6 crore came from public performances.

Public performances, which contribute 31 percent to overall royalty collections, have not been happening since March due to the coronavirus-induced lockdown.

Eyeing new revenue streams

IPRS is now busy looking at various avenues to bring in revenue. Recently, it joined hands with Facebook. The social networking giant has signed a music licensing deal with IPRS that will cover licensing and royalties whenever music represented by IPRS is used on Facebook and Instagram.

Users of both platforms will have access to over eight lakh songs from the IPRS database.

“Facebook will provide the log of the songs played on their platforms and royalties will be paid accordingly,” said Nigam.

He added, “More and more people are consuming music on user-generated content (UGC) platforms. Music companies have their own pages on Facebook like channels on YouTube, where music is uploaded. And then music also gets played in user-generated content for dance videos; now it can be used in Reels on Instagram. This is why we proposed the platform (Facebook) get a license.”

However, when it comes to revenue, Nigam said it all depends on the usage. “It is not that per-stream money comes in. If the song gets revenue or if an ad is played then revenue is generated.”

This is why Nigam said that while the digital medium through music OTTs and social media platforms is making artistes stronger creatively, it is not necessarily as strong in terms of monetisation.

A tough market

“Globally, this medium (digital) has started generating huge revenues but in India most of the apps are subsidised or free. So, they are not making the same kind of money as they do in international markets. If you see the subscription fees on music streaming platforms internationally, it goes up to $9-10 billion because most of the subscribers are paid. But that’s not the case in India."

He added that in India “even if Rs 10 is charged today to a consumer, the revenue will be huge thanks to the huge subscriber base, which is as large as 20-25 crore.”

According to a Deloitte–Indian Music Industry 2019 report, consumers in India are not accustomed to paying for music. While ad-supported OTT platforms have witnessed rapid growth, subscription-driven OTT music streaming platforms face a challenge. In fact, the conversion into subscription among Indian music listeners on OTT streaming platforms is as low as 1 percent.

Currently, IPRS charges music streaming platforms 12 percent of advertising revenue or a per-stream rate, whichever is higher. It has also clarified that the price per stream will not be valued at less than 10 paise. For a premium or subscription-based service, 12 percent of the end-user price has to be paid in terms of royalties.

All this shows that the digital medium’s contribution in terms of royalties to artistes has strong potential to increase, especially now, with new platforms such as Facebook and Instagram coming on board.