In India, “The industry norm [for royalty payments from streaming services to music labels] is Rs 0.10–0.15 per stream. That varies company to company, sometimes it’s Rs 0.10, sometimes Rs 0.12 or Rs 0.15; once it even went up to Rs 0.18, I heard,” Tips Music’s Managing Director Kumar Taurani said. This is among the first clear indications that has been made public of how much money exchanges hands between music streaming services and record labels for such deals. This was part of an interview MediaNama did with Taurani about the company’s deal with streaming service Gaana that fell through.
An edited and translated version of the interview (from Hindi), where Taurani discusses why the deal didn’t get renewed, follows.
MediaNama: Gaana put out a statement saying there are too many upfront minimum guarantees you are asking to renew Tips’s streaming deal. What do you have to say about that?
Actually the timing is bad. Because of this pandemic, maybe minor business can go here and there. But I feel that people are staying home, and OTT services are getting a decent push. But there are mixed reports, some people say that business has grown, some say that it has suffered, by 10 or 15%. Some say there’s 25–28% growth has happened. Various kinds of reports are coming.
Unfortunately, our deal with Gaana was expiring in between the pandemic. Sometimes what happens is when you already have a lot of problems, you may not want to give a label its desired value. But the kind of dealings going on in the market, the way growth should have been happening, did not happen with us, I feel.
There’s the pressure of uncertainty, how long the pandemic will go on, so they might not be willing to move forward. So we couldn’t come to an agreement on the price. So the deal didn’t happen.
We’re having some small issues that we’re trying to sort out, which hopefully will happen soon. That’s not a big deal.
MediaNama: So are talks still going on?
No, it’s clear that Gaana will not have our songs starting from 24th May night. Their contract expired on 17th and they asked for seven days to clean up their catalogue to remove our content, and that time ran out. I don’t think there should be a single Tips song on there right now. They have completed the removal. Both of us made a decision on 17th–18th.
Based on what’s going on in the industry we gave Gaana a quote and it was not acceptable to them. They must have a yearly target, without which this wouldn’t have happened. I respect that; so if you can’t do it [sign a deal], don’t.
MediaNama: Why does this happen more with Tips than with other labels? Your catalogue is not on Apple Music or Spotify either.
That’s a very crucial thing. Everyone in this business has their own models. The new OTT services, initially they feel that they should target the three-four companies coming out with new content, and look at catalogue companies [like Tips] later.
That’s fine. They go for new content, and move aggressively there. But they realise that when users on ad-supported or paid services can’t have access to older songs from artists like Anu Malik, Aatif Aslam, Nadeem–Shravan, Alka Yagnik, and soundtracks like Kachche Dhaage, Pardes… they just go to a different service.
Even Gaana in the first two years, had problems with catalogue companies. I explained to them, you have invested crores in IT— because they were new. And plus, we have many contractual issues also, with Section 31D contracts. But later, they agreed on everything and for two years we had our music on Gaana.
But we’re always on priority 4 or 5, and so I feel they unnecessarily give more money for new music. Every company has its strategy, but when they spend so much on new content, they have little left over for catalogue companies. Then they realise this is a big problem, we can’t survive without it. That keeps happening.
[Note: Section 31D of the Copyright Act allows for broadcasters to license music by unilaterally paying a fixed statutory fee. A 2016 government notification included internet broadcasters under its ambit, a controversial move.]
MediaNama: So you’re saying the major streaming platforms are overpaying for the top three labels?
I’m not saying that. Everyone has their own calculations. After the ‘90s also, in 2002–03 onwards, we have created very good content at Tips: Ajab Prem Ki Ghazab Kahaani, Race, Kismat Konnection, so many. Now we’re also releasing one new song per day on YouTube. We have a strong catalogue, and we have a market share of 60–65% in ‘90s music.
Our minimum guarantee demand is not in line with what other labels would quote, because those companies’ content gets established easily. If you’re listening to Gaana on your phone, the screen size is small, so it is up to them to decide whose music to promote, and how to promote mine.
Whether he gives me 5% or 7% in terms of space, that’s in Gaana’s hands. If they don’t feature our music, then it will be a loss for us, and it’d be better to not be on the service in the first place. On YouTube India’s top ten artists, four are Tips artists. For YouTube, Tips is a higher priority, second or third. So maybe these OTT companies are still not getting the point.
But because of the cheap data revolution thanks to Jio, users outside the four big cities are getting connected. Maybe the big cities have had a bigger craze for international or new music. But pan-India, it’s mass [content] that works.
Recently, JioMart released, with discounts of seven rupees on butter. That kind of discount may not make a difference to you and me, but we know how data consumption jumped when Jio launched with cheap tariffs. Streams have multiplied by 4-5x.
They [OTT services] will have problems without our content, though I pray they don’t. Whatever budgets they have, and how they spend it is their decision.
MediaNama: Are you negotiating with others like Spotify?
Yeah, we keep talking with them. They want our content, and we want their platform. We keep talking, whether or not we can get a deal signed; sometimes it takes months or years. It’s not just me, other companies also go through this.
MediaNama: On the Wynk 31D case, what’s the status?
[Note: Airtel’s Wynk invoked Section 31D to claim a statutory license to stream Tips Music’s content, a move that the label successfully challenged in the Bombay High Court. Spotify tried the same thing with Warner Chappell in India, but after the Tips judgement (which is being appealed by Airtel) Spotify withdrew the suit and signed a deal with Warner.]
With Wynk, we were initially licensing music via PPL India, an association. And then we decided to do individual deals. After sixteen months, they have not paid me a single paisa, and they gave me a 31D notice, which according to me is completely illegal. That was an arm-twisting tactic from the industry. OTT services have been threatening it in meetings for a while, but with Tips they actually made good on the threat and served us the 31D notice.
They must have thought we are a small player, so what will we do? But wrong is wrong. If you do wrong, you shouldn’t get away with it. So I spoke to my lawyer, and he said we have a good case, so we went ahead. We got a judgement from the Bombay High Court. The proceedings took several months, but all the things we said, all our arguments, on worldwide treaties, the government’s intention, they ruled in our favour.
But in Bombay courts, when business is on, they don’t halt things immediately, they give a month or two notice, giving option to go to higher courts. On the last day of that period, they appealed to a double bench of the High Court, so we are still fighting that case with Wynk. Let’s see what happens. The next hearing is in July.
In the last nine months, we haven’t gotten any money from Wynk. They have only deposited a small amount in court.
MediaNama: When you compare the per-play revenue from the statutory license, how big is the difference between that and what you would get from an individually negotiated deal?
The industry norm [for individually negotiated deals] is Rs 0.10–0.15 per stream. That varies company to company, sometimes it’s Rs 0.10, sometimes Rs 0.12 or Rs 0.15, once it even went up to Rs 0.18, I heard. Plus, they give a minimum guarantee. Sometimes there were deals like, give Rs 29 per paying subscriber, and so on. But even if you sell a subscription at Rs 100, you will get the value out of our music, no matter what.
Whenever they want to tighten deals, they can’t do it to big companies, so they take panga with small and medium companies. If a company accounting for 20–40% of your streams gets 60% more of the revenue, why should revenue that is rightfully mine go to someone else? I’ll take what I’m owed or not give you the goods. What I feel is it’s unfair.