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Eros CEO Kishore Lulla On Impact Of Copyright Act Amendments

Eros International CEO Kishore Lulla believes that the amendment to India’s Copyright Act, if the go through in the current format, will help reduce business risk by ensuring that minimum guarantees paid out to composers are reduced. On the Eros International conference call, an investor asked Lulla about the impact on Eros’ business, with the changes in the Copyright Bill:

Q. What are the proposed changes to the Copyright Act, and how will they impact Eros and the overall film value chain.

Kishore Lulla: Eros also has a publishing division, and we have a joint ventuer with EMI internationally, and we represent the EMI catalog in collecting those royalties in India. the step was going to come,a nd it’s a step in the right direction.

When it comes to the royalties, there’s a twelve-twelvth share. when the music label acquires a film, they keep six-twelth of the royalties collected by societies across the world. which is where television plays it. the balance 6-twelvth of that royalty is divided between the composer and the music publishing house which collects on their behalf. This is not on sales, but on royalties from the performing rights being collected. That’s what Javed Akhtar and the society went to the government, on why don’t we implement the 6-twevth share which can come to the composer, and the rest can go to the music record label.

Our model is a co-production model. At the moment, the producer pays a fixed fee to the composer. Now, when you negotiate the contract, you’ll negotiate on the basis that six-tweltvth of the royalty will go through to him, and on that basis we’ll negotiate the contract. It will pass through the value chain, and it’s a welcome step where we will come to some agreement between composers and producers so transparency in the business will come.

Q. Will this be applicable propsective or retrospective effect?

Kishore Lulla:It will be from prospective effect. From a retrospective effect, there is a royalty which the Indian IPRS is collected any way, and disbursing that to the composer.

Q. On any music created, half of the right belongs to the producer, and half to the composer. When Eros is selling its part of the right to T-Series, wont the value of that music come down by half?

Kishore Lulla: One is a publishing aspect, the other is the commercial aspect. You make money from selling the physical aspect, and then there is digital – mobile downloads, ringtones, mp3, itunes etc. Now that kind of pricing, what you’re selling the price at, that you don’t share with the composer. The publishing societies are collecting the royalty from radio, live shows, restaurants. That is the fight about – how much should be shared?

Q. Earlier all these used to go to the music label?
Kishore Lulla: Earlier, 50% was being collected by the IPRS on the behalf of the music composer, and those royalties were not much.

Q. Out of the total amount that you realize from music rights associated with a movie, how much would these royalties be?

Kishore Lulla: I think the total industry must be paying about Rs. 90 – 100 crores totally per year. The music industry is around 5% of the total entertainment industry. It’s a step in the right direction because whatever money you are using through piracy today, with this implementation coming in, you’ll make more, and the whole value chain will make more. What’s more, you will be able to negotiate with the composers, a lesser fee.

At the moment, they were getting a one-off fee, so they were charging you a bigger amount. Now that they know that revenues will be there for the next 25 years, there will be a lesser MG (minimum guarantee), and the risk will be lesser and lesser.

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