Copyright

Attention musicians & songwriters: IPRS to hold Extra-ordinary General Meeting on February 9, 2017 to replace its Articles


Image from here.

At long last, the Indian Performing Rights Society (IPRS) will be holding an extra-ordinary general meeting (EGM) on February 9, 2017 to begin the process of overhauling its governing regulations. This has been long overdue since IPRS has been on the wrong end of the law for a long time as we explain here and here.

The notice laying down the agenda for the meeting can be accessed on the IPRS website over here.

The first item on the agenda is a special resolution to replace the Articles of Association (AoA) currently governing IPRS and the second item on the agenda is an ordinary resolution directing the release of Rs. 13 crores from the Owner-Publisher’s account to be paid to the account of author/composer members of IPRS subject to the Enforcement Directorate releasing the funds of IPRS that it has frozen.

As far as I am aware, this particular meeting will take place under the existing Articles of Association under which only the music labels can vote. It is thus unlikely that the musicians and song-writers will be able to vote at this AGM.

The membership criteria under the new AoA

One of the long standing problems at IPRS has been the issue of control. As per the amendments of 1994, registered copyright societies were required to be under the control of copyright owners. Registered copyright societies were also required to maintain a Register of Owners – logically only those with names in this Register could vote in meetings and claim the royalties earned by the society. Unfortunately, there was a great degree of confusion in IPRS on the preparation of the Register of Owners and the music labels used this confusion to stage a coup with the aide of that civil court in Barasat district. In all fairness to the music label, it is very likely that they owned a majority of rights in the music administered by IPRS but the manner in which they staged the coup was disgraceful. Thanks to the bad blood they created more than a decade ago, the law was amended in 2012 to require copyright societies to be under the joint control of authors and owners and the governing council will necessarily be required to have an equal number of authors and owners. If these terms are not complied with IPRS cannot be registered as a copyright society, which also means that it can technically not collect royalties.

In my opinion the solution proposed by the 2012 amendments is worse than the problem and a recipe for long term instability. Determining the degree of control to be exercised by each copyright owner is a difficult enough task because although one particular music label may own 10,000 tracks, it may be producing awful music which doesn’t really earn royalties. On the other hand, there may be a music label which may own only 500 tracks but which earns the copyright society most of its revenue. How do you determine voting rights in this case? Equal votes for everybody, irrespective of the market power of individual repertoires? Now imagine the same scenario in the context of authors. A musician or songwriter can be prolific or extremely selective – some may churn out 100 mediocre songs, while others may pen only 10 or 20 hit songs. Should each of them have the same voting rights? A more complicated question – if the author has assigned away the ownership right of a work to a music label, do both the author and owner count the same song towards their voting rights?

The new draft AoA put up on the IPRS website is following a ‘one man, one vote’ policy, which I think will lead to problems – voting rights should be weighed against the commercial success of the author and owner’s repertoire. Otherwise quantity and not quality will carry the day. This will have larger ramifications on the type of music that is produced by the industry.

The more worrying part of this AoA, is that it is silent on membership criteria. The definition section of the AoA defines “member” as “author” or “owner” registered as such by the society as per the articles. However the AoA does not define the membership criteria. Rather the AoA states that the governing council (“the board”) of IPRS will lay down the criteria for membership but these governing council members will have to be elected by the members of IPRS. How is IPRS going to decide the rights of a member to vote during the board elections, if the qualification for membership criteria has been delegated to the Board? If there is no qualifying criteria for members, there can be no elections for the board. If anybody can explain to me how this is going to work please do share your comments in the comments section below this post. I may have missed something in the AoA.

The Rs. 13 crores payment – Mr. Akhtar, can we have some transparency?

The second agenda on the meeting is the commitment by the owner publishers to pay Rs. 13 crores to the author/composer members subject to the Enforcement Directorate proceedings against IPRS which have frozen certain assets of the company. I’m sure there is a bigger story behind this rather shady transaction but unfortunately I don’t have any details. There are however the obvious questions. Why the sudden generosity by the music labels? Is the payment towards clearance of past dues, in which case the resolution should reflect that intent rather use the word ‘forego’ or have the music labels struck a deal with some of the author-members?

The other “Rs. 13 crores question” is the issue of distribution of this amount received from the music labels? Are all authors going to get an equal cut of the money and if not, how will the money be distributed?

IPRS has landed itself in such an awful pickle because of its failure to be transparent. One can only hope that Mr. Akhtar, who is presumably leading the charge for the authors will be more transparent. He owes a responsibility not only to his colleagues in the industry but to the public as a whole because IPRS has been conferred an exceptional monopoly under the law. To begin with Akhtar should release a statement on the aim and intent of the Rs. 13 crores and explain why this has been tied in with the ED proceedings? If an offense has taken place under the law, the guilty should be punished. I do hope nobody is interfering in the ED’s investigation and prosecution.

Also in the interests of full disclosure, I would like to mention, that I have in the past been professionally consulted by some parties in the music industry.

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in Indian academia. He is currently a Research Associate at Applied Research Centre for Intellectual Assets and the Law in Asia (ARCIALA), Singapore Management University.

2 comments.

  1. janhvi shetty

    In reply to paragraph 7 in your article, with respect to the membership criteria in the AoA, have checked the IPRS website,
    In addition to the applicant qualifying under the eligibility requirements set out under 4 (i) and 4 (ii). The applicant would have to fill in the Membership Form (which would list out certain criteria, Form not available online), the applicant would also have to provide all the supporting documentation requested http://www.iprs.org/cms/Membership/MembershipRequirements.aspx and submit an additional work form http://www.iprs.org/cms/DownloadForms/WorkNotificationForms.aspx, evidencing the work.
    Under Article 5 (c) of the Application of Member, no person shall be admitted as a member unless he has fulfilled the qualifying criteria set under the “Rules”. The Rules comprise the Copyright Rules, 2013, Rules under the Companies Act, 2013 and any rules made by the society.
    Section 45 of the Copyright Rules on Membership of Copyright Society, only that the membership is open to all authors and owners of rights in specific categories of works for which it is registered.
    It is my understanding that if a person meets the requirements in Article 4, Section 45 of the Copyright Rules, fill and submit all the information requested in the membership forms, then they would have fulfilled the criteria. Leaving the window open, only, for any changes which the society would want to add.
    However, what’s alarming to me, is that the IPRS has made membership to the society an autonomous process giving themselves the unrestricted power to deny a membership provided they give a reason for rejection.

    Reply
  2. Shekhar Mennon

    In this entity ( unregistered copyright society as of date) Practically two statutes are in operation. One is Company Law and other is Copyright Law. Now both are entwined with complicated knot on membership of Guarantee company, existing court orders, if vacated the retrospective operations, ownership as per Copyright provisions, voting rights, quorum, proxy provisions, directorships, one require CG approval other is silent, no explanatory statements required under copyright provisions but under CL provisions statutorily required with complete material facts otherwise whole new proceedings will come to grinding halt, filing of returns so and so fotrh of both the legislations. Existence and validity of Governance and constitution of Board is always opened for challenge by the user community ( radio / TV / FHRAI etc) till the operations of both the legislations are not separated rightly with legal due diligence. 😁👍🙏

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