Music industry claims Rs 18 billion losses; cites FM stations as partly to blame

MUMBAI: It has become a case of swim or sink for India's beleaguered music industry. Over the past three years the industry has been battered and bruised by many factors including Internet piracy, judicial leniency, FM radio, and lack of optical disk regulation. This has resulted in what the industry claims is a loss of Rs 18 billion.



An Indian Music Industry (IMI) meeting held here today trained its guns on FM Radio stations, among other targets of attack. There are two problems here, according to IMI. Firstly music companies are unhappy about the deal they are getting from the likes of Radio Mirchi, Radio City, Red FM, etc. "FM refuses to pay a fair price for our content," IMI general secretary Savio D'Souza rued, while pointing out that discussions are underway at present. The initial rate fixed was Rs 1500 per needle time hour. The copyright board brought this down to Rs 1200 and divided the time zones. The full rate only applies for prime time. Standard time and overtime get discounts of 40 and 75 per cent respectively. "The IMI is appealing against this as we feel that the decision was arbitrary. Can you imagine what would happen if FM spreads its tentacles to ten cities?" D'Souza asks.

Also present at today's meeting were IMI president Vijay Lazarus, and former police commissioner Julio Rebeiro who joined the fight against music piracy in 1996.

Lazarus jumped in here saying, "The IMI also wants some sort of restriction to be placed on the amount of time fresh material can be played as new artistes are getting hurt badly. Saathiya has sold 10 lakhs (1 million). In the old days the figure would have been 30-40 lakhs. Today people who have heard the songs five to six times on the various FM stations do not feel the need to go out and buy the CD."

"Thanks to FM there has been a 38 per cent decline in the purchase rupee value. There has been a 33 per cent decline in listenership hours and a 37 per cent decline in the number of records sold," D'Souza said. Although not ideal, one way out for IMI is that the government does not rationalise the FM license fee structure, D'Souza added.

"We do not need better laws. What we need is better enforcement." That was the crux of Rebeiro's speech. An important announcement made was regarding Rebeiro and his anti-piracy team who have been conducting copyright workshops for police officials in cities like Delhi, Chennai, Lucknow. Now the endeavor has been brought to Maharashtra. The workshop aims at educating and sensitising the workforce about the legal and social issues around piracy. This needs to be done, as it is not at the top of the priority list at the lower administrative levels, Ribeiro said.

Shooting from the hip as expected, Rebeiro minced no words in describing pirates as thieves. He stressed the need for stiffer fines. In Western countries while offenders don't go to jail the fine levied is so hefty as to make it economically unviable for the pirates to continue operating. In Holland it is $50 per disc seized. In India the maximum overall fine that can be imposed is Rs 50,000, Ribeiro lamented. The conviction record is appalling. Out of the 5,247 criminal cases that the IMI has recorded only 253 have ended in conviction. Just 35 have received adequate punishment while the rest got off lightly which gives piracy a boost. Worsening the situation is the fact that there is a delay of five to seven years in some cases Ribeiro pointed out.

He also mentioned that if the situation carries on the way it is at the moment, the legitimate music industry would disappear, as has been the case in Bangladesh, Pakistan and Sri Lanka. According to Ribeiro, reducing prices of CDs is not the solution to the problem. After all the music companies locate, nurture and market talent. All this costs money. In addition they also have to pay royalties. The pirate bears none of these burdens. He just appropriates the material, Ribeiro says.

Lazarus pointed out that it costs Rs 50 million a year to fight piracy. The 50 music companies that are a part of IMI including Sony music, BMG Crescendo, Virgin give one per cent of their turnover towards this endeavour. Cash losses over the past 18 months have amounted to Rs 3 billion. Out of the 6 billion being lost in a year Rs 1.5 billion is due to cover versions, which are done thanks to Article 52(1)(j). This is an exception to the copyright infringement. Through this songs are rerecorded with new artistes without the consent of the original performer. Also identical labels and cover photographs are used. So a person might buy a Lata Mangeshkar recording not knowing that the singing is being done by someone else. The section allows anyone to produce versions of a track after a gap of two years by paying a minimal royalty of five per cent.

Lazarus stressed the need for urgent action within the next 15 months. On the positive side, he pointed out that the government had been appreciative and supportive. In the last budget excise duty relief on CDs was provided. He also said that the Information and Broadcasting Ministry was looking into the issue of putting into place the optical disc lock regulation. Also IMI is working on anti piracy spots, which will air on MTV, Channel [V].

D'Souza said that one of the solutions the IMI was in favour of was the setting up of fast track courts in 100 cities. Compulsory arbitration must be allowed. He also said that the value added tax (VAT) was further adding to the problem. The music industry is categorised under the mechanical or residual class. "This is unfair as we do not manufacture cassettes, CDs. We simply use them as a delivery technique. We want to be categorised as an audio publishing industry." Also the onus of proof in a court of law should be on the defendant to show conclusively that he is not indulging in illegal theft of intellectual property. He noted that theft through MP3 and VCD is on the rise.

"A hit several years ago would sell 100-150 lakhs (10-15 million). Today it is in the region of 45-55 lakhs. Two in five recordings are pirated. Keep in mind the fact that the film industry does not product more than three major hits a year. Of course the fact that the price of CDs has come down from Rs. 275 to Rs 95- Rs150 has cut into profits," D'Souza said.

Finally the IMI is also trying to enforce licencing terms with establishments that play their music for ground events. The major corporate houses though educated are not willing to pay a certain portion of royalty back to the artiste where the music orginally came from, is the industry's grouse.

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