Streaming Royalties and Equity: Examining Fair Remuneration under Copyright Law in the Digital Music Economy

Introduction : Over the past ten years, India's digital music market has grown exponentially thanks to the quick development of streaming services like Spotify, Apple Music, and YouTube Music. While these platforms have changed music access and made it possible for Indian content to be released globally, they have also brought up a basic legal issue: can India's current copyright structure sufficiently guarantee artists in the streaming economy get fair compensation?The Indian copyright policy explicitly recognizes the economic rights of authors and performers, especially through revisions to the Copyright Act, 1957 in 1994, 1999, and most notably in 2012. By giving individuals unalienable rights to royalties for the commercial use of their works, including in situations of assignment, these modifications were meant to improve the situation of creators. In theory, this framework reflects the core objective of copyright law to incentivise creativity by guaranteeing just and equitable compensation.

However, the shift to digital streaming from more conventional forms of exploitation, including radio broadcasts and retail sales, has revealed serious flaws in this system. The complicated, platform-driven licensing agreements that enable streaming are very different from the broadcast paradigm that Indian law envisions. The Bombay High Court's ruling in Tips Industries Ltd. v. Wynk Music Ltd., which concluded that online streaming is not covered by the statutory licensing framework under Section 31D of the Act, made the difference very clear. As a result of this view, streaming platforms may rely solely on private negotiations with rights holders, who are frequently dominated by large record labels, and are not subject to mandatory licensing duties.

A structural gap between statutory rights and their implementation has been brought about by this judicial stance. Although authors and performers are legally entitled to income, contractual agreements might supersede these rights because streaming does not require a licensing structure. In reality, this leads to disproportionately poor compensation for artists, especially small producers who have little negotiating power with platforms and middlemen. The problem is structural rather than just contractual, reflecting a larger mismatch between copyright law and the realities of the digital music industry.  

The Indian predicament must also be viewed in the perspective of the world, where countries like the US and the EU have made major reforms to deal with comparable issues with streaming compensation. These examples demonstrate how copyright law is changing in reaction to technology advancements and emphasize the necessity for India to reevaluate its legal system. In light of this, this study analyses whether the Indian copyright system as it currently exists can guarantee just compensation in the era of streaming. It examines India's legal system for music rights, finds doctrinal and structural weaknesses revealed by digital platforms, and places these problems in a comparative setting. In the end, the article makes the case that the promise of copyright as a mechanism for just compensation runs the risk of remaining mostly theoretical in the context of digital music in the absence of focused legal, contractual, and regulatory reforms.

Legal Framework in India

Performers are granted particular rights and royalties under Indian copyright law. The economic and moral rights of performers are acknowledged in Sections 38–39A of the Copyright Act, 1957. Performers' rights such as reproduction, distribution, and broadcasting of their performances are listed in Section 38A. Crucially, regardless of any contractual provisions to the contrary, Section 38(4) states that a performer has the right to royalties for any form of commercial exploitation of their performance. On paper, therefore, each Indian artist or singer whose voice or performance is recorded ought to receive a share of the proceeds whenever that recording generates revenue.

In reality, though, these rights depend on the distribution of music. Only radio and television broadcasters are required to obtain a license under Section 31D, which was inserted by the 2012 Amendment. Any broadcaster that uses music does not need to get separate permission from the owners of the rights after paying the fees stipulated by legislation. Importantly, Section 31D's definition of "broadcasting organization" has been construed as restricted to conventional radio and television. Internet streaming was not mentioned in the Copyright Rules at the time, which set statutory prices for live broadcasts on FM and TV. As a result, online streaming services are not always covered by Section 31D. Internet music services (OTT platforms) are unable to use the statutory licence since they are simply not included by the definition. This means that instead of paying a fixed statutory charge, services like Spotify or Gaana must negotiate directly with copyright owners (labels) under standard licensing.

In other situations, collaborative management somewhat reduces the disparity. In order to jointly license works and collect royalties, performers and producers may establish Copyright Societies (Sections 33–37). Two such Indian music-related groups are the Indian Performers' Rights Society (IPRS) and the Indian Singers' Rights Association (ISRA). These organizations, however, have mostly dealt with licenses for mechanical and radio/TV duplication and frequently function on a voluntary basis. Only under the current broadcast/public performance regime does Phonographic Performance Ltd. (PPL) collect royalties for recordings used on radio and television. Because streaming companies are exempt from obtaining a blanket license from IPRS/ISRA, societies lack influence in the absence of a regulatory mandate to cover streaming. As a result, while India's legal system ensures that artists are entitled to royalties, it does not require streaming services to do so.

Problems and Gaps

The main difference is that in India, streaming does not guarantee performer royalties. There is currently no way to compel payment when music is played online, despite the fact that artists are legally entitled to royalties. Streaming businesses view music as content bundles and solely bargain with publishers and record labels. Artists are subsequently compensated by labels in line with their individual contracts. In reality, artists typically get a very tiny portion. According to a survey-style study, big labels might take between 50 and 90 percent of Spotify's profits, leaving musicians with as low as 10 percent. This is similar to the worldwide complaint that streaming services prioritize labels above artists.Because streaming services don't pay artists directly, the effect is particularly noticeable in India, where entire artist communities rely only on what labels pass on.

This disparity is made worse by contractual restrictions. Back when CDs and radio were big, many Indian performers took contracts. These agreements frequently grant labels extensive rights to utilize digital media, frequently with little justification. The rights of trademarks under such agreements have often been maintained by Indian courts. For instance, the Bombay High Court determined in Tips v. Wynk that Wynk's actions of permitting downloads or sales qualified as "rent" or "sale" under the Act, necessitating express permission from the copyright owner. Instead of viewing streaming services as distinct licensees, the court viewed them as user interfaces for labels' sales. Artists cannot expect a larger share only because new technology has been developed because labels rarely modify outdated contracts.In contrast to the EU (where contract modification rights now exist) and the US (where termination rights exist), Indian performers do not currently have a legal option to renegotiate or get out of one-sided agreements if streaming becomes widely used.

Another gap is the ineffectiveness of societies for streaming. IPRS and ISRA may potentially offer collective licenses for online music, but they cannot compel platforms to accept them. Without legal assistance, these societies remain weak. Additionally, it has been said that societies' governments are sometimes run by special interests and are not democratic. Artists often find it challenging to engage or even comprehend their rights. According to one investigation, the bulk of performers' societies in India are controlled by record companies and publishers; as a result, organizations that are meant to protect artists' profits may not actively enforce fair shares. To put it succinctly, the default method leaves labels in the role of gatekeepers: streaming services transfer money to labels, who then distribute it to artists as they see appropriate. Many performers are deprived of the "minimum guaranteed" income that the law intended because to this systemic imbalance.

Finally, issues with transparency exacerbate these worries. Even if statutory modifications were made, enforcement would still require clear responsibility. Currently, record companies do not provide artists with the same information, and streaming providers do not reveal their terms of payment. Because of this opacity, artists are unable to verify if streaming profits were calculated or allocated correctly. India does not have a legislative requirement for thorough royalty reporting, in contrast to a number of other countries. Lack of data standards, such as standardized metadata to identify songwriters and artists, makes tracking consumption difficult. In actuality, without the necessary transparency or audit rights, any new "fair remuneration" provisions may be ignored. Information disclosure and tracking in the supply chain of digital goods must therefore be addressed by any all-encompassing solution.

Comparative Analysis and Proposed Solutions for India

US Method: As a result of the 1995 Digital Performance Act, performers in the US are safeguarded by a unique public performance right for sound recordings. U.S. law mandates that internet radio and n-demand streams pay statutory royalties; non-interactive streams pay a set proportion of revenue, while interactive services pay negotiated rates for performance and replication (via Sound Exchange). The latest Music Modernization Act (2018) combined streaming mechanical royalties and increased them to about 15% of service revenue. Even though many American musicians still complain about the low prices, it's important to remember that platforms cannot lawfully broadcast without paying for a license. In the US, terrestrial radio is starting to compensate performers (the upcoming AMFA). Crucially, in the U.S. system, platforms cannot renounce the statutory royalty rights of performers and record labels, which are upheld by collecting agencies. In contrast, obligatory licenses are only held by rights-holders (labels and publishers) in India. Platforms would be compelled to join the system and contributors would be compensated appropriately if India implemented a mandatory streaming license similar to the United States (e.g., Section 31D-expansion).

EU/UK Method: Europe has taken a different approach, focusing on just compensation. The EU Copyright Directive 2019 guarantees "appropriate and proportionate" recompense for online exploitation of authors and artists. Notably, performers cannot contract away this privilege. Member states have implemented new rules requiring streaming services to share usage data with writers and for online exploitation contracts to pay royalties instead of just one-time fees. For example, certain EU countries allow artists to set minimum payments or terminate unfair contracts. The UK is following suit with proposed legislation that would give UK musicians a non-waivable royalty right on streaming (akin to their present broadcast ER right).India could clearly stipulate that any deal with online platforms must set aside a royalty percentage for performers if it were to follow suit. Additionally, India may mandate that streaming services and studios reveal their earnings to artists or risk fines. The EU/UK model demonstrates that creator revenues are protected through legal mandates rather than merely market bargaining.

Major Takeaways and Changes for India

Statutory Streaming Royalty: Change the Act to require public music streaming to result in an ER payment. In particular, expand Section 31D to cover OTT platforms or create a new phrase (like Section 31E). For instance, the law may state that "any broadcast or communication of recordings to the public, by any means including internet streaming shall be subject to equitable remuneration to performers."" The Copyright Board (or a recognized body) would determine royalty rates or formulas, such as a fixed percentage of service revenue or a per-stream fee.This guarantees that performers have a direct entitlement to payment anytime their work is broadcast, just like in the EU.

Retain Current Royalty Rights: Make it clear that Section 38(4) royalties apply to internet use. Nothing now stops a label or streamer from totally rejecting the artist. A new clause may state that no arrangement may withdraw the performer's right to royalties. Therefore, if a label licenses a song to Spotify, the label must pay the performer the agreed-upon amount, regardless of the label's specific agreements. This utilizes the existing statute rather than creating a whole new system.

Streaming Collective Licensing: Permit IPRS/ISRA to act as an artist's representative. The Act may designate these entities as the exclusive licensing agents for rights pertaining to online streaming. As a result, just like with mechanical copies, the streaming services would need to apply for a license from the society (e.g., through the Harry Fox Agency in the U.S.). To avoid conflicts of interest, independent artists ought to serve on society boards. This would simplify licensing by allowing platforms to pay societies, who would then distribute the royalties, rather than engaging in one-on-one negotiations with thousands of artists.Accurate membership records and clear distribution guidelines (possibly tiered by fame or play-count) would be necessary for such a scheme.

Contractual Safeguards: Incorporate remedies for earlier contracts. For example, if the label does not match the original contractual terms with the current market rate, a performer may terminate a recording assignment after, say, 20 years. Similar to US termination legislation, this gives older artists a second chance. Ensure that all new contracts incorporate audit and accounting requirements. The label should provide the artist with revenue and stream statements that are audited by an unbiased accountant as part of any contract with an internet service provider. Despite being procedural, these steps would enable artists to uphold their legal rights.

Transparency Mandates: Following Germany's lead, the government should require that all streaming data be sent to rightsholders in a consistent format. This might be controlled by the Copyright Act, which would mandate that platforms give collecting organizations thorough usage data (with penalties for non-compliance). Standardized metadata (per IPI/ISRC codes) would facilitate the tracking of each performer's contributions to a recording. Corporate structure may also be transparent; publicly traded labels should disclose the entire amount of streaming revenue distributed to publishers and artists.

Market Initiatives: The Indian music industry might freely test user-centric compensation structures, where membership fees follow listeners rather than pool. The government might encourage this by providing tax benefits to platforms that adopt more equitable practices. Support for independent musicians (such as grants or minimum guarantee schemes) may also be connected to evidence of fair streaming practices. Lastly, creating an impartial "Streaming Rights Tribunal" to arbitrate conflicts could provide underpaid artists with prompt redress.

Conclusion

India's music industry today presents an astonishing paradox: the very musicians who support it often continue to get chronically inadequate pay, despite the industry's widespread recognition, digital dominance, and commercial success. Over the past 10 years, streaming services like Spotify, Apple Music, and JioSaavn have transformed music consumption, shifting the industry away from download-based and physical models and toward an access-driven economy. This change has unlocked huge value and made India one of the fastest-growing streaming marketplaces in the world. However, as a result of this growth, performers—singers, session musicians, and even composers—who remain at the core of the creative process have not been fairly compensated.

This disparity stems from a structural and legal lag. The Copyright Act, 1957 made significant strides by recognizing performers' rights and incorporating mechanisms for royalty sharing, particularly with its 2012 amendment. Sections like 18 and 19 were designed to stop authors and composers from contractually renouncing their rights to royalties, especially in cases of commercial exploitation. However, when these regulations were developed, digital streaming was not yet the most popular way to listen to music. Business parties often exploit interpretational gaps because the law does not explicitly or sufficiently account for streaming profits.In reality, a lot of streaming agreements are set up such that record companies receive the majority of the cash, leaving artists reliant on antiquated contractual clauses that rarely account for the extent of digital exploitation.

When this problem is examined in a comparative international setting, it becomes more apparent. The system in the US includes a framework for mandatory licensing under laws such as the U.S. Copyright Act, which permits statutory licenses for specific uses of music. More significantly, companies like Sound Exchange handle digital performance royalties, especially for non-interactive streaming. This guarantees that a percentage of earnings is given to artists directly, eschewing conventional label-dominated structures. For artists, this results in a more reliable and enforceable source of income.

The European Union has adopted the "equitable remuneration" approach, as evidenced by measures such as the EU Copyright Directive 2019/790. This approach gives performers a non-waivable right to reasonable compensation when their works are exploited, especially through digital streaming. Even if a performer has assigned their copyright, they are still entitled to a percentage of the revenues because this right operates independently of contractual arrangements. Collective management groups are crucial to the efficient distribution and implementation of these rights.India, on the other hand, does not have a streaming royalty’s system that is as strong and enforced. Despite the existence of organizations like Phonographic Performance Limited and Indian Performing Right Society, their limited bargaining power, operational breadth, and governance issues have hindered their ability to guarantee equitable pay for all parties involved. Furthermore, artists frequently have limited insight into how streaming revenues are determined or allocated because to the lack of complete transparency obligations.

India can lessen the discrepancy in streaming royalties by enacting a hybrid reform strategy that includes stricter collective licensing, greater transparency, and regulatory changes. The Copyright Act, 1957 should be changed to expressly include digital streaming as a royalty-bearing use, and the EU Copyright Directive 2019/790 should give performers a non-waivable entitlement to just compensation. The Indian Performing Right Society and other collective management organizations need to be strengthened through improved governance and digital tracking in order to ensure proper royalties’ collection and distribution. Contractual safeguards and mandatory transparency from streaming services and record labels would facilitate artists' ability to verify revenues and negotiate more equitable conditions. Instead than impeding industry expansion, such reforms will establish a more egalitarian and sustainable music ecosystem, guaranteeing that artists are fairly compensated in India's quickly growing streaming economy.

Author: Khushi Tiwari in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney