The Indian Music Industry has two big agendas, Shridhar Subramaniam, President of Sony Music India & Middle East, and Chairman of the Indian Music Industry (IMI) has said in a Vision 2022 report released by the IMI: The first is anti-piracy, especially because of “illegal P2P apps or sharing apps, or even websites based out of India or Pakistan.”

Subramaniam estimates that the losses resulting from piracy amount to Rs 1200-1500 crores (around $250 million) each year for the Indian Music industry. The Vision 2022 document is based on a conference held by the IMI, with participation from other organisations in the space, including Phonographic Performance Limited (PPL) and Indian Performing Right Society (IPRS).

The problem of safe harbour

The second issue that Subramaniam raised was about ensuring fair value from the entities that pay the music industry: the music industry is around $130 million (Rs 850 crores), but powers “some giant industries” which are around $2 billion, like Radio which is Rs 3000-4000 crores, TV which is Rs 25,000 crores, live music business, device and equipment, which is Rs 2000 crores.

“Those industries pay less than 2-3% towards the use of music. This is a fair value issue and we have to address this,” Subramaniam has said. He pointed towards towards the valuations of service providers like Saavn, with the Jio-Saavn merger valued at Rs 7000 crores, and Radio Mirchi at Rs 3300 crores, while Saregama, which controls the most amount of historical music in India, is valued at Rs 1000 crores.

This issue of value gap was raised repeatedly, and looked like safe harbour – which absolves platforms of liability for the actions of their users – is being blamed for it.

Ang Kwee Tiang, Regional Director, Asia-Pacific, IFPI (International Federation of the Phonographic Industry) said that they’re running a very strong anti-piracy campaign against search engines like Google, “trying to impose liability on them, to ensure that they either filter or take down and have stay down facilities.” He adds that 95.7% of takedown notices issued by IFPI are for repeat content i.e., “when we issue a notice, it is taken down and pops up again.”

Eric Baptiste, Chair of the Board, CISAC and CEO, SOCAN, says that safe harbour provisions “are dated and create a value gap or transfer of value issues. Legislation is necessary to address this.”

In a panel discussion with both Ang and Baptiste cited in the report, they had pointed towards “the need for a system that shares value”, “the relentless advocacy for more efficient copyright protection or management through the Music Modernization Act in the United States”, saying that “the value gap needs to be closed, to enable a level-playing field between right holders and digital services, especially user uploaded content sites.”

The report cites the panel as blaming legal provisions like the The Digital Millennium Copyright Act (DMCA) in the United States, saying that the value “has now shifted too far, in favour of tech companies. The companies are now worth billions but content owners are unfortunately penalised. Safe harbour provisions have worsened the value gap.” The music industry doesn’t get compensated by YouTube because of safe harbour provisions, and is forced to accept small amounts, with “the alternative being the issuance of notices and take downs which have a low success rate.”

It seems that “Spotify and Apple pay $22 dollars a year per user to the industry, whereas, YouTube pays less than a $1 dollar per user.” The panel supported Article 13 of the EU Copyright Directive. They said that technology companies cannot claim a fair usage exception.

Ang adds that the “IFPI German national group has started legal action against MP3 conversions” and the “stream-ripping side youtube-mp3 no longer exists”.

Compulsory licensing issues

Subramaniam said, “These same large companies lobby with the government and insist on statutory and compulsory license provisions, to further diminish our value. The recent notification about whether statutory licenses are applicable on internet companies, is worrying,” and sought the support of the government.

Ang pointed out that Section 31D of the Copyright Act was was introduced to give license to the broadcasters without the need to secure permission: they just need to pay royalties. In 2016, an interpretation of this Section extended the license to digital use which extends the license to include all forms of digital usage. Ang pointed out that following “India’s accession to the WCT and WPPT”, “If India continues to apply the Section 31D interpretation, it would run foul of obligations under international treaties.

Kumar Taurani, Chairman and MD, Tips Industries, said that a telecom operator negotiated with Tips for months, and offered lower money than their “real market share”. Upon refusal to license content, the telecom operator “slapped a Section 31D notice on Tips. A Section 31D notice is meant for the radio industry, not for the Internet. A company like Tips spent Rs 60-70 lakh on the case, but the order is still awaited. They chose my company because it is mid-sized. They did not want to fight with the big players.”

Some data from the event/report to take note of:

  • Digital represents 78% of total Indian music revenues.
  • Physical music revenue in India has fallen from $30 million to $9 million.
  • Public performance rights collections have dropped substantially, from over $20 million down to just slightly over $10 million.
  • Sync revenues (related to integration with other types of content) are at $7.7 million.
  • 33% of digital revenues are from paid subscribers, 27% from free but legitimate services, and the rest from video streaming and other types of digital services.
  • Per capita revenue for music in India is $0.10, compared to $0.21 in China.
  • As per an IFPI survey, Indians spend 21.5 hours a week listening to music, higher than the global average of 17.8 hours.
  • 95% of internet users in India consume music through on-demand streaming.
  • Audio-streaming is used by 86% of Internet users in India.
  • YouTube is responsible for 14% of all music listening time and 36% of all on-demand music streaming time.
  • 72% of the respondents download music through stream-ripping.
  • 76% of Indian internet users aged 16-64 engage in some form of music piracy. In China, it’s 64%.
  • Most Indian internet users convert music content from videos to MP3.
  • Finally, Google is being used to search for free music with 55% of search engine users explicitly looking for piracy methods.
  • 18 million unique users of music on Indian streaming platforms
  • 4 billion monthly streams.

Takedown of copyrighted content

The report cites Abhishek Dhoreliya, Founder & CEO, MarkScan, explaining how takedowns work: for a music client, the copyright enforcement company uses 6 months data, working on 200 tracks covering Hindi, Telugu, Tamil and Punjabi music for a period of 6 months. They claim to have addressed around 100,000 cases of piracy: Around 60,000 listings were removed from search engines and around 45,000 media files were removed. “Hundreds of mobile apps were also removed.” This, he claims, led to an increased visibility for legal or whitelisted platforms improves on search engines, with traffic getting diverted to these platforms. “This leads to a significant drop on traffic to the pirate websites, which are being targeted. It is all about advertising for these platforms.”

Recommendations for India based on the China experience

  • Strong anti-piracy programme: A strong anti-piracy program is needed. Without a strong anti-piracy program, digital service platforms will exploit loopholes to avoid licensing. China already has such a programme (Sword Net Action).
  • Consolidation of the Indian music industry: “There are big and small Chinese companies as well as those from Hong Kong and Taiwan that have come together. The collection societies in China are also fairly organised and internal issues have been dealt with. Whilst there are no public performance and broadcast rights in China yet, total collections on the producer side are about $21-22 million, which is nearly twice of what PPL collects in India, despite PPL’s primary rights in India.”
  • Indian consumers will pay for music: In China, like in India, the belief was that consumers wouldn’t pay for music. However, 5% of China’s 600 million digital music consumers pay for music. India has a 1% conversion rate, so it can be improved.
  • Refraining from exclusive licensing arrangements: The Chinese government discouraged exclusive licensing to prevent the creation of a monopoly, or a ‘one horse’ or ‘two horse race’. “When a label’s license is across the board, more competitors are in the sphere.”

Download IMI’s Vision 2022 document here.