PPL and X’mas Collections: Transparency and the Right to Information

Yes, dear readers: tis PPL (Phonographic Performance Limited) that I speak of. The very same entity, whose non transparent and high handed functioning resulted in an earlier guest post.

And why do I mention them again today? Its not that I don’t trust the memory of our perceptive readers, some of whom have hauled us up poor bloggers for inconsistent statements made in our enthusiastic and rather immature posts several years back. But in the light of my conversations today with a doleful hotel owner, who complained against PPL’s high handed and rather inequitable methods of music tax collection, I thought it fit to sensitize our readers once more to the fact that when PPL comes knocking on your door, please do not get intimidated. Rather, demand more information from them–remember that ours is a democracy, with accountability and transparency enshrined as bedrock principles (well, at least normatively)

Begin with asking them a fairly simple question. Under what authority are they collecting moneys for the playing (public performance) of songs in your hotel, bar or other establishment? Ask them to produce proof of their right to collect in respect of the music that you normally play in your establishment. In other words, make a list of music that you normally play/perform (say, in the last month or so) and ask them to specify the ones in respect of which they own the right to collect. Also ask them to make available copies of agreements to prove that the songs concerned belong to copyright owners (record labels) who are members of PPL.

In short, it is your right to know under what authority they levy this extra tax on you. Recall from our previous post that PPL has the right to collect moneys for the public performance of certain sound recordings in bars or other establishments. But if and only if, they have been granted this right by the copyright owner (typically a record label) in the first place.

Once they reveal this information to you, one of three things could happen.:

i) You are satisfied that they have the right to collect on behalf of the record labels (whose music you play) and therefore you willingly pay the required license fees.

ii) You find that only a minor percentage of the music that is normally performed in your establishment belongs to PPL’s repertoire . In such an instance, and if you are prepared to fight, you could reject the uniform blanket fee based licensing agreement that PPL shoves in your face. After all, if you play only 2 songs that belong to PPL’s repertoire (out of the 50,000 songs that you play that month in total), why should you pay a blanket fee that is the same as some other bar owner who plays about 40,000 of PPL’s songs in a single month. If PPL insists on a blanket license here, there is a strong case for an antitrust complaint . As to whether our current MRTP structure is robust enough to sustain such a challenge is a moot issue. But things will change as and when (and that is a long “when”) the Competition Act wades through all the political/legal quagmire to finally come into force.

iii) You don’t want to pay and you tell PPL to go fly a kite (in French)! But how would you do this, without falling foul of the law? We advocate a slightly risky option, but one that deserves a shot.

You only play songs of American record labels. What–such a restricted collection? Well, not quite, as about 75% of mainstream global music is controlled by the big four record labels–and three such labels, Sony, Warner and Universal Music Group(to the best of my knowledge) are multinational companies headquartered in the US of A! (EMI appears to be headquartered in Great Britain. Although Universal appears to be a fully subsidiary of Vivendi, a French company, it is headquartered in the USA).

And why would playing songs of only American record labels not be a problem? As our earlier post pointed out:

“Our copyright regime is premised on the notion of reciprocity. In other words, if the US copyright act does not provide copyright protection to Indian authors, then we do not need to provide any copyright protection to US authors. Reflecting perhaps the biblical saying: “Do unto others what you would have them do unto you”.

There is no copyright protection for the public performance of sound recordings in the US–therefore Indian copyright law need not provide such protection to sound recording companies from the US. Unfortunately, our copyright order which deals with reciprocity does not make this distinction. Since such a distinction is mandated by the parent Copyright Act, the copyright order ought to be amended immediately to rectify this inequity.”

In other words, if a bold hotel or bar owner wishes to take on PPL, it ought to play just US record label songs, get sued by PPL and then challenge the vires (constitutionality) of the copyright order. Or it can even challenge the vires of this order without waiting to be sued, which is in fact far more advisable.

Apart from all of the above, we one again call upon the government to take PPL to task for not revealing critical information such as licensing rates etc on their website. Our earlier post stated:

“PPL’s website is likely to make even the most ardent nudist blush in terms of how “bare” it really is. It does not even bother spelling out licensing rates–so much for transparency and good governance! Being a society registered under the Indian copyright act, the government must take immediate steps to force PPL to disclose licensing rates and other material particulars that are central to its operations. After all, PPL has been gung ho about going after every establishment that makes the mistake of playing recordings without paying royalties : shouldn’t there be a n obligation on them to disclose their rates of licensing and other particulars to the public, so that the public are better informed?”

We need information not just on their rates, but on how royalties collected by PPL are being disbursed. Since PPL’s model is that of “blanket licensing” (i.e bar owners etc do not pay per song played but pay depending on how big (in terms of square feet) the establishment is), one wonders as to how they split up royalties between the various copyright owners. I have a nagging suspicion that PPL is merely paying out moneys to the record biggies in India, namely Saregama, Univeral, Sony, EMI and TIPS. The smaller record labels are left high and dry! A suspicion that appears to be strengthening after my conversations with experts in this area.

Further, our earlier post also pointed to the fact that PPL does not appear to have made any disbursements to owners of foreign sound recordings.

A look at PPL’s annual reports in 2006-2007 and 2005-2006 shows that the only expenditure in foreign currency made by PPL in both financial years are towards travel (Rs. 7,22,591/- in the year 2005-2006 and Rs. 3,93,025/- in the year 2006-2007: See for example page 24 in the attachment to Form 23ACA -06-07–this can be procured from the Registrar of Companies].

If any of our readers are in a position to understand these documents better and interpret them to indicate whether PPL is making royalty payments to foreign right owners or not, please let us know. On a prima facie reading of these documents (and I am no accounts expert), it would appear that no payments in the nature of royalties to foreign copyright owners have been made. Here again, there are two possibilities:

i) A number of global record labels have subsidiaries in India (Universal, Sony etc). And some of these subsidiaries are PPL members. Perhaps PPL is paying such subsidiaries directly. This however leaves open the question of whether there is any music outside this “subsidiary” repertoire. In particular, we note that PPL appears to have entered into a back to back reciprocal agreement with PPL UK (the collecting society in the UK) in 2005 (information obtained from the 2005 Annual report of PPL UK which contains a photograph of Vipul Pradhan of PPL closing the deal with the PPL UK head). Why have no foreign royalty payments been made to PPL UK, despite the efflux of three years?

ii) PPL collects money but does not bother disbursing to foreign copyright owners. In which case, it needs to be taken to task.

To conclude, SpicyIP sincerely hopes that some of you out there are bold enough to take on PPL and expose their high handed and rather unethical royalty grab strategies in a court of law. This perhaps might be the best way of converting a key statutory collecting society into a transparent and accountable organisation.