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In response to my last post, I received a dismissive comment from Achille Forler, an insider from the music industry, who like most other folks from the music industry consider any commentary from outsiders as ‘pointless’. In any case, we on the blog seem to be much more receptive of criticism and I’ve taken the time out to rebut each one of the points raised by Forler.
Forler’s comments are in red below, with mine in black:
Dear Prashant, this post is pointless on several counts.
First, the existing Act makes room for only one Society per class of works, so there is no latitude to create competing Societies.
Wrong! The proviso to Section 33(3) allows for the registration of more than one Copyright Society per class of works. The proviso, which has not been deleted in the last round of amendment, is reproduced as follows: “Provided that the Central Government shall not ordinarily register more than one copyright society to do business in respect of the same class of works.” The wording of the proviso clearly allows for the Central Government to register more than one copyright society in respect of the same class of works provided that there is a special reason for the same. If companies like T-Series or the members of the South Indian Music Companies Association (SIMCA) can demonstrate such reasons they should be allowed to start their own copyright societies. In my opinion these companies should not be forced to get into bed with either IPRS or PPL until the Government is able to assuage their fears of mismanagement in these copyright societies. Why is the Government giving the inquiries into IPRS a quiet burial? If there is nothing to hide, let the Registrar of Copyrights make public the results of his inquiries into complaints raised by Akthar and Co. If the Government is not ready to do, it has no business to force companies like T-Series or SIMCA to join tainted copyright societies.
Second, it is not the Societies but the Copyright Board that will determine the rates; so there is no benefit in setting up competing Societies.
The Copyright Board is going to determine royalties only if content users are not satisfied with the rates demanded by Copyright Societies. Of course, if PPL is going to ask for a looney 20% royalty rate, the matter will surely end up before the Copyright Board. Even presuming that 99% of all matters end up before the Copyright Board, the composition of the copyright society will have a significant bearing on the royalty rate fixed by the Copyright Board. For instance if the member companies of SIMCA form their own copyright society, they can argue to be treated differently from the Bollywood music labels on the grounds that the economics of music and broadcasting in South India are significantly different from the north and west of India. Since the market for South Indian and Bollywood market is so distinct, companies like SIMCA can easily make a case out for royalty rates which are different from the rates imposed on Bollywood. Given the much smaller market in South India, I would argue that the royalty rates for these companies should be higher than for Bollywood music labels which operate in the context of a much larger market where they can benefit from economies of scale.
Third, from a consumer perspective, less Societies is far better than more Societies: ask iTunes, Google, or Indian broadcasters who clamour for a single-window clearance as they feel reporting statements to IPRS and PPL is proving too much! The same picture emerges if you look at the rise of pan-European licensing: who pushed for it if not the consumers?
iTunes, Google or Indian broadcasters are not consumers of music – people like me are consumers of music and there has never been an instance in the history of economics of mankind where a big cartel of music companies working together has resulted in good news for the consumer. In America ASCAP was put through brutal anti-trust decrees by the U.S. Govt. When BMI was formed by broadcasters as a counter-weight to ASCAP, it too was put under a brutal anti-trust decree by the Department of Justice.
There is no reason for having a single super copyright society in India. For Bollywood, let there be one copyright society consisting of the old guard of IPRS & PPL. Let there also be another copyright society consisting of T-Series, Yash Raj Music etc to act as a counter-weight.
If content users like the broadcaster lobby don’t like it – tough luck, they already have a pretty sweet deal under the new amendments. A few reporting requirements aren’t going to sour the deal. My guess, and I’m guessing also the reason for Forler’s opposition, is that the resulting competition between these two different copyright societies will drive down rates to the satisfaction of content-users and most broadcasters will be content enough playing the music of only one copyright societies.
And oh yes, before I forget – India is no Europe! We do business the Indian way.
Fourth, the advent of streaming services like Spotify and Deezer, and new tools like TuneSat, we have seen a dramatic increase in both the accuracy of the data and in micro payments. The exploding volume of data to process royalties is saturating the systems of even the largest Societies like PRS and GEMA or ASCAP; SACEM alone invested euros 71 million (INR 495 crores) over 7 years in its IT systems just to cope with this data revolution on which the accuracy for collecting the author’s royalties depends.
I don’t see the point of this point. Obviously if you have mega-copyright societies, you are bound to have mega-bills for IT systems. Have smaller copyright societies and I’m sure Indian jugaad will take care of the rest. Moreover if services like Spotify etc. are able to provide accurate information on usage, it should make life simpler for copyright societies and not more difficult as suggested by you.
Fifth, the more Societies you have for one class of works, say literary and musical works, the more companies a publisher has to set up and operate just to collect what he could have collected with one company had there been only one Society.
From what I understand about the Indian music industry, there is no industry of music publishers, as understood in the Western sense. Even presuming that India does have an industry of music publishers, doesn’t it make sense for these music publishers to hedge their bets across multiple copyright societies? Why put all your eggs in one basket and be at the mercy of one thug? With multiple copyright societies, there is more of an incentive for copyright societies to compete with each other and ensure better services for both their stakeholders and clients.
In the coming years, smaller Societies will continue to do the “dirty job” – licensing small local users such as shops and hotels – but they will have no option but to abandon the essence of their power – royalties processing – to bigger Societies. Of course, they can also remain opaque, where a few cronies pocket most of the revenues, but that is not an alternative that we should consider.
In this point Forler contradicts his first point by acknowledging that multiple Copyright Societies can exist under the law. If there are smaller copyright societies, they will have to function under the aegis of the Copyright Act and its attendant reporting requirements under the new amendments. Being opaque may no longer be an option.
amen.
Oh dear! What has nationalism and jugaad got to do with copyright? You’re studying in Stanford, aren’t you?
To my mind, a blog is an open space where one can freely express ideas without fear of being shot down on extraneous considerations such as caste or nationality. I am not writing under ‘Anonymous’, so just address my points. If you cannot bear dissenting views then don’t invite comments.
We are discussing a matter that is crucial to any copyright system: the collective licensing of musical works. The subject is complex and any post must necessarily be viewed as a short-hand expression. But it is worth having a free debate on this subject on which I have very strong views: I may not be entirely right but nobody can say that I lack experience in this topic.
Why are we working on setting up a Global Repertoire Database? What challenges do users like Spotify and Deezer present to authors? I call them ‘users’ because I (or the Societies in which I have registered my authors’ works) license works to them (who in turn sell to you, but in my books I cannot call you ‘user’).
Prashant, have you ever processed royalties statements? Do you have an inkling of the magnitude of the task or what the practical issues are? Why should I and the authors on whose behalf I collect the royalties have to spend 58% of my IT budget to process what represents only 0.5% of our income? Spending ten rupees to collect one is not a viable business model. Nor is ‘not collecting’ an option.
When I speak about smaller Societies, I mean Societies in countries with small income, not multiple Societies in a single country. Again, look at the pan-Europan licensing: it is not handled by the Portuguese Society (no disrespect to their work, but they just wouldn’t be able to handle the task).
Also, you can not have music publishers in country where authors have no rights. But once they have rights, someone has to administer those rights; royalties will not fall from heaven.
I can go on and on… But, in essence, with the Amendments authors are starting a new business from scratch: instead of a one-off payment, how to get their REGULAR DUES from those who use their works. No amount of jugaad will bring the dues.
Having more than one Society per class of works is a false ‘smart idea’. Over to you now!
Oh Yes Mr. Reddy, India is no Europe, but I gather that although you are more interested in Stanford ways but you still specialize in local jugaad!
I see you have interpreted the proviso to Section 33(3) in complete disregard of what is reproduced as follows “The Central Government may, having regard to the interest of the authors and other owners of right under this Act, the interest and convenience of the Public register such association of persons as a copyright society…..” This makes me believe that you have taken a very aggressive stand in the interest of the “other owners of right” whereas Achille speaks here for the authors and publishers.
Let’s say there are multiple societies for musical and literary works, if I were a music composer, tell me how should I choose the society for becoming a member and on what parameters. I compose for Bollywood, Tollywood, Indie, TVCs….
I would understand your point if you were to say that the different rights for the same works may be licensed/administered separately e.g a separate mechanical and performance society for musical and literary works, but same class of works, for the same set of rights, spread across various societies is not a great idea.
About the determination of rates, it’s the most bizarre logic that there should be different royalty rates basis the potential of the market. To view revenue potential without keeping in mind the investments required is quite lame. Rates need to be standardized and obviously need to be language agnostic. I don’t see any international society giving works from Africa a better rate than works from Europe.
Now I have some questions for you as the “consumer” of Music. Industry outsiders view are always welcome when they are in the light of clear understating of how the industry works. May I you when was the last time you actually paid the royalties directly to the societies for consumption of music? When was the last time you were at a restaurant / pub and you consumed music and went on to pay the society. Or alternatively, you viewed a video on YouTube and monies were debited from your account as a payment to the society. It is imperative to understand that music licensing business is largely B2B. When licensing is made difficult i.e. multi-window then one of the possible outcomes will definitely be that either lesser music will be licensed / consumed or appropriate license will not be taken and there will be rampant infringement, as it exists in today’s context.
I am a big fan of India jugaad myself, but obviously you do not understand the volume of data that gets generated and needs to be processed to pay out accurate royalties to authors & composers. Monthly reports of iTunes, Spotify, Nokia Ovi, etc runs into millions of lines. And not to forget that I am talking less than a cent per line. Sometimes the cost of processing does not even justify the revenues. However, that does not mean that data should not be processed. Economies of scale makes sense for processing of such voluminous data.
Regarding your keen observation regarding non-existence of a Music Publishing industry in India, I really want to know your understanding of the Publishing business. For me, it mainly comprises of signing authors and composers, promoting their works, procuring record label deals, registering and licensing the works, royalty claiming and processing and accounting and protection of rights against infringements etc. if you have nothing out-of-this- world important to add to this list, all this is functioning well in India, better than a lot of other markets. About hedging the bets, I don’t think Achille is referring about making investment decisions. He is talking about making licensing effective, simple and easy so that more and more services license the content. Which in turn means more and more revenues. We are talking about growing the overall pie something that benefits the people and intellect that makes it a music industry and not just your chosen ones.
Mr Forler – What is this nonsense about nationalism? As always you twist words out of context and ignore the main arguments.
If business in India is done differently from the way it is done in the U.S. or Europe then that is a fact.
As for expressing ideas freely on the blog, you are free to do so but that does not mean you can be dismissive of our views. Disagreeing with our views is different from being dismissive of our views and for some reason I just can’t seem to drill that into your head. Let me be clear, the next time you leave a comment calling any of our views ‘pointless’ I won’t let the comment through.
But getting down to the merits of your comment – I can’t understand your opposition to having at least two major copyright societies for Bollywood? How is that a problem? Let publishers and users have a choice instead of putting all their eggs in one basket? My only fear with the creation of one super copyright society is that it will work like a monopoly. And I have NO FAITH in the government’s ability to regulate. Even after the mess at IPRS was brought to the govt.’s notice they did not appoint administrators to IPRS. Clearly the Copyright Office doesn’t have the will to regulate.
The only guarantee in this case is to create competition between two copyright societies.
As for South Indian Music Companies, I think they definitely have a case for creating their own copyright societies. Their markets are completely different and it makes no sense for them to join a copyright society dominated by Bollywood biggies.
My formula therefore would be atleast 2 major copyright societies for Bollywood and atleast 1 copyright society for the South.
Prashant
Prashant,
I know that you know that I know how much you are revolted intellectually and emotionally about what you call “the mess in IPRS” and about which you have extensively investigated and written here on this blog and elsewhere.
But you will admit that all your feelings are incommensurate with the financial losses that I and many others had to bear on account of this deplorable situation. We are the affected parties, not you. At least trust us to have our interests at heart and the fierce will to defend them. The idea of setting up a competing Society to IPRS is not new; some also suggested legal action… Had authors followed those ideas at that time then they would still be nowhere today.
So you’re welcome to propose your solution of having three Societies instead of one; but just think for a minute: what if by doing so we would not end up multiplying one headache by three? There would not be enough gods in heaven to fix THAT mess!
Rather than doing things differently from the rest of the world through a misplaced sense of nationalism and wrong notion of jugaad (hasn’t IPRS been doing things differently from the rest of the world for all these years?), I foresee a time when this country – having now integrated the global copyright system and being talked about as the ‘new hope for authors in Asia and elsewhere’ (by CISAC’s president, Robin Gibb, a few hours before he died) – will become the global processing centre for royalties. Now that would be real smart (jugaad)!
No hard feelings. This is a militant post.
Hi Mr. Forler,
You are probably right – a lot of my analysis is guided by what happened at IPRS. I think a lot of that could have been avoided if there was either effective regulation OR competition which forced IPRS to pull together its act.
I can’t for the love of god understand how people like you are willing to get back into IPRS when we do not have any closure or accountability fixed on the people responsible for the mess at IPRS. At the very least the Registrar of Copyrights should have published a name and shame report. We don’t even have that. So clearly regulation has not worked and I don’t see it working in the future.
Competition on the other hand, may just work. If the U.S. can have three copyright societies just for author rights – ASCAP, BMI & SESAC, I don’t see why Bollywood can’t have two for author rights. Sure, the initial investment may be higher when creating two competing societies but I think the long term benefits will far outweigh the initial investments. In my books there is no replacement for competition.
Prashant