A letter to the Media and Entertainment Industry, from Bhushan Kumar, MD of Music Label giant T-Series

There has been a lot of hue and cry about the amendments proposed in the Copyright Act by the Standing Committee which tabled its report recently. There are some critical issues involved here,  which are the ground realities, and without understanding and appreciating which, a viable solution that would help the entire industry cannot be attained. I would like to present my views on the core issues involved here, to the entire music and radio industry and the media and entertainment business.

First and foremost, let me make it very clear that we are very open and willing to share revenues with the Authors & Composers  Having said that, let us look at the main issues  involved here.

First, what are the rights? The music rights, as we know, are primarily rights comprising of Master Sound Recording Rights and Publishing Rights (underlying musical & literary works in the Master sound Recording). Master contributes nearly 75% to the music revenue pie and the balance comes from Publishing income. Globally, the Publishing income is shared 50% between the Publisher (Film Producer in India's case) and 50% goes to Author & Composer jointly   As I just said, our industry is not averse to sharing revenue percentage with the Authors & Composers; we are willing and happy to share, but only after recoupment of MGs paid by the Music labels. The Authors & Composers are paid handsome advance remuneration by the Producers for their contributions; in fact, the top two or three Composers are paid packages as high as Rs.1.25 crore for composing music for a single film. Isn't it fair, then,  that the producers who invest crores in shooting songs on big stars -- unlike in the western countries -- and music labels which acquire rights with high financial stakes in a film (of which 8 out of 10 flop anyways) and further spend millions on its promotion,  should be entitled to recovery of at least the cost of the MG paid by Music label before sharing any revenues with the Authors & Composers who have literally no financial risk involved, and are also paid handsomely in advance?

As I said, I completely agree that Authors & Composers deserve to share the revenues and we would be happy to do so. They deserve their share of the revenue. But would the Authors & Composers be willing to share the financial risk of the investment, the production costs of the film or even just its music, considering they will be rights owners? Would they be willing to work for much lower or token fees to assert their ownership and creation of the music elements to share the financial burden and risk of the film, or even contribute proactively to the cost of producing the elements? Producers and Music Labels might be forced to ask those questions.

A wrong perception has been built up giving the impression that Composers do not make money, whereas in fact, Composers / Singers make millions by performing hit songs in live shows,  while the Producers / Music Labels take the entire commercial risk to finance, produce, promote and popularize and thereby create those very hit songs in the first place  Singers / Composers make millions by appearing on TV and live shows performing popular songs already popularized by the promotion campaign of the Music Labels / Film Producers. Very few people are aware that music labels and producers only get 1% or less of this income that is earned by Singers / Composers. Isn't it fair that the sharing formula should remain the same across all verticals, and Producers / Music Labels should also get a sizeable share from such performances?

Music labels will not be able to pay any MG for fractured rights i.e. only Master Sound Recording Rights, and that too without future formats of commercial exploitation,  because it's not commercially and practically viable to recover any MG through fractured rights from areas like Mobile, TV, Public Performances and Radio. After all, Music Labels will have to minimize their risk exposure, and therefore, no MG for any film -- big or small –  will be paid to producers, thereby curtailing the fund flows of the producers and also further increasing their financial risk.

The rights should be administered only through a single window, as is the current industry practice, thereby assuring better monetization for the rights and assured MGs to the producers and income to the Authors & Composers  and the entire value chain. It will ensure assured advance remuneration to the Authors & Composers and also MGs to the Producers plus share in royalties to Authors & Composers and Producers as per freely negotiated terms.

The Statutory Licensing provisions in addition to the already existing Compulsory Licensing provisions being proposed in the new Act will completely erode the negotiating power of the rights owners, and the concept of copyright will have no meaning. It will  further erode revenue for the entire value chain, resulting in minimal royalties. Does anyone believe that the Authors & Composers, who are best at creating music, will fare better at monetizing rights than the Music Labels who have been running their music businesses for decades now and best understand how to get the best deals that would ensure higher revenues for all? Let the Authors & Composers continue to do what they do best, and let the labels continue to do what they do best.

The revenue-sharing formula as prescribed by the copyright board for FM Radio industry is not a workable solution and has already lead to various litigations. The rate of 2% of net revenue is completely arbitrary and uncalled for  In case it is made applicable to TV as well, then the revenue sharing formula would be impossible to monitor on TV channels which have multi-format programming, and will lead to further chaos with claims and counter claims.

I believe that the proposal relating to Statutory License should be dropped entirely, and Compulsory license should be limited to only one, the national broadcaster, i.e. All India Radio, who would serve the best interests of the Public. This would enable copyright owners to freely trade the rights as per market conditions.

This is an established practice even in the case of cricket match broadcasts controlled by the BCCI, whereby, in the public interest,  the BCCI allows feed to Prasar Bharti at concessional rates, but at the same time is free to negotiate the license fee with other TV channels like Sony or Star at market-driven rates.

The way forward and the solution will be decided by positive discussion. For the sake of all in the music business,  I hope it will give serious consideration to the submissions above.

Thank you.