Royalty battle over mobile ringtones
By Ed Lane

Royalties from mobile phone ringtones are soon expected to replace sales of CDs as the chief source of income for music makers around the world.

And with 50 million mobile phone subscribers in India already, battle lines are being drawn between Bollywood producers and songwriters over who gets the cash from hit movie songs like Dhoom (Explosion), which got two million downloads from mobile phone subscribers in 2004 to lead the pack.

Earlier this month, the Crazy Frog song became the first mobile phone ringtone to top the pop charts in Britain. The trend has caught on in India in the past two years as well as the country's telecom companies scrambled to offer its growing young population more than just a chance to phone home.

"When mobile phones first came to India in a big way it was seen as something necessary to stay in touch," said Kartikeya Shukla, marketing manager for ringtone services at India's largest cellular phone company, Bharti Cellular.

"Now it's a lifestyle statement. This is especially true for younger people who like to experiment and differentiate from their peers. With a ringtone song, people who call you get a sense of your personality."

The trend has caught India's formulaic movie and music industry, called Bollywood, by surprise.

The money collected by mobile phone companies, estimated at one million dollars last year and growing 15 per cent a month in 2005, also alerted songwriters to appeal for copyright royalties each time one of their songs played, sparking a clash with producers who claim complete ownership.

Bollywood lyricists and composers in particular have been taking a one-time fee from producers for songs for decades without considering royalties on the material that can sometimes be far more valuable than the original fee.

The producers attempt to market the songs to recoup the fee but face widespread piracy originating from countries such as Pakistan, China and Malaysia and an unwillingness by restaurants and other venues in India to pay royalties.

Songwriters claim that ringtone royalties were not covered in the original contracts and have called for a share of the new revenue.

The issue of copyright royalty payment and control of the Indian Performing Rights Society, which distributes song royalties is the subject of court cases.

"Bollywood does not know that such rights exist in the world," said Achille Forler, who runs a music publishing business in India called Deep Emotions that seeks to cater to these artists. "There has never been anyone in Bollywood who could monitor the rights."

Vipul Pradhan, chief executive officer of Phonographic Performances, which distributes song royalties in India to record companies, said that the musicians have already signed away their rights.

"The producers have the bought the rights and are the exclusive owners," Pradhan said in a telephone interview. Ringtone royalties are collected by companies called aggregators that digitise songs into mobile phone formats for a fee and pass on the royalty portion to the record companies and the performing rights society for distribution, Mr Shukla said.

He said the issue of royalty ownership did not affect Bharti directly because they pay the agent.

"We are very transparent. My job is to see the customer has the best choices and we pay for the creative process behind that," Shukla said.

Musicians in Europe and the United States earn royalties from songs played on mobile phones, the radio and in restaurants and hotels with royalties collected by the American Society of Composers, Authors and Publishers or Britain's Performing Rights Society.

Last year, these societies collected more than eight billion dollars in such royalties worldwide, of which 1.35 billion dollars came from Asia.

In India however, royalty collections from the same sources lag.

Last year, the Indian Performing Rights Society managed only two million dollars in royalties for the world's most prolific film music industry, 40 per cent of which came from overseas.

"On average, India makes 1000 movies a year - there are six to eight songs in each movie - so that is 8000 songs a year being played around the world and this is just the movie industry," said Forler.

Forler, a native of France, publishes 20,000 Indian song titles from two catalogues once held by India's first professional recording studio in Calcutta which operated from 1932-74. He has a financial interest in copyright royalties on the collection as well as other songs he represents in India for publishers such as BMG.

"We have taken the Hotel and Restaurant Owners Association to court to pay us royalties," said Mr Forler.

"They are equivalent to the cost of a cup of tea every day of the year. But added up across the country and the millions of restaurants in India - it's huge," said Mr Forler, who was elected to the board of the Indian Performing Rights Society. His election is being challenged by record companies who also have seats on the board.