The T-SERIES Story

MUSIC PIRACY

The term piracy is generally used to describe the deliberate infringement of copyright on a commercial scale. It is illegal and criminal in nature. Music piracy basically refers to three kinds of activities:

Counterfeiting - The copying of the sound as well as artwork, trademark, label and packaging of the original recording, with an aim to mislead the consumer into thinking that they are buying the genuine product. Pirate Recording - The unauthorized duplication of music from legitimate recordings for commercial gain. Pirated CDs or music cassettes may be compilations or combination of hit titles of different music companies. Unlike a counterfeit product, the packing and presentation of a pirate copy is usually not a replica of the legitimate commercial release. Bootlegging - The recording, duplication and sale of a live concert or broadcast without the permission of the artiste or the music company which has the recording rights for the artistes performances.

Those involved in music piracy range from owners of big recording facilities to small shops with a single music system, which is used to record songs that the customers ask for.

According to the International Federation of the Phonographic Industry (IFPI), a worldwide trade association for the music industry that identifies and attempts to solve problems of piracy, sales of pirate recordings were $ 2.1 billion in 1995. This represented unauthorized sales of 954 million music cassettes, 84 million CDs and 4 million LPs - indicating that one in every five recordings sold worldwide was a pirated copy.

India was the world's third largest pirate market in volume and sixth in value. The Indian music industry lost millions of rupees each year to the pirates. Of the nearly 580 million cassettes sold in the year 1997, 175 million were illegally manufactured and sold by pirates. The pirates evade payment of royalty, excise duty and sales tax and also they do not have to incur the promotion and publicity costs. Piracy levels were as high as 90 % in the early 1980s, coming down to 65% in the 1990s and to 40% in 2000.

T-SERIES & MUSIC PIRACY

Gulshan's father Chandrabhan and his family moved to Delhi from West Punjab in 1947. The family members began selling fruit on the roads and within a few years, earned enough money to establish a small fruit juice shop. Chandrabhan later started selling pre-recorded music by opening a record shop. In the early 1970s, Gulshan began looking after the music business and named it Super Cassettes.

By 2000, T-Series had become a $ 90 million group with a presence in the Consumer Electronics (color television, fans), CDs (12 million CDs per annum), Audio/Video Magnetic tapes and cassettes (186 million cassettes per annum) and mineral water businesses. The company had rights to over 2000 video and 18,000 audio titles, comprising of nearly 24,000 hours of music software. T-Series had a technical collaboration with Hyundai of Japan for its color television venture.

This meteoric rise of T-Series was termed by analysts4 as 'a story of avarice, greed and cunning and the clash of two mafias - one represented by Gulshan and the other by those whom he damaged.'

In the 1970s, the Indian music industry was dominated by GCI and Polydor (later named Music India Ltd.- MIL), which sold only expensive LP records through a few record shops. These companies did not set up facilities to manufacture cassettes on a large scale. Since cassette players were not very common in the country at that time, GCI and Polydor were happy offering cassettes in small numbers at very high prices.

In the late 1970s, cassette players flooded the country, many of them being Japanese 'two-in-ones' (radio and cassette player) brought in large numbers by workers returning from the Gulf states. In 1978, with the Indian government liberalizing the import and export trade, new kinds of luxury consumer goods appeared in the market. These goods were popular with the rapidly growing middle class population. Cassette players (and consequently, cassettes) were one such new item that quickly became popular in the country.

Compared to the LP records, cassettes were incredibly cheap to produce and reproduce and could be easily distributed and transported. Gradually, a large number of outfits began setting up illegal copying operations. Most copyright violators chose old Hindi film songs from the GCI catalog. All that was required to run a copying outfit were two cassette players and a supply of tape, spools and cases. Since the bootleggers paid no royalties and no excise and used cheap cassettes, they were able to sell their products at half of GCI's prices. By the mid 1980s, cassettes reproduced in this fashion accounted for a significant portion of the music sold in India. A major part of this piracy industry was reportedly owned and operated by T-Series.

In the late 1970s and early 1980s, audio cassette production was defined as a small-scale industry (SSI). Thus, Gulshan was able to take advantage of the subsidies, loans and all the other incentives accruing to the SSIs. The only capital expense the company had was the cost of the cassette - Rs 7 - and the cost of duplicating. This cassette was retailed at about Rs 25. On the other hand, GCI and MIL cassettes retailed for Rs 36-45, as the companies had to pay, in addition to royalties, an excise duty of 15 % on every cassette. As T-Series did not pay any excise duty, the entire 15% benefit was passed on to the customer. Gulshan also kept his dealers/retailers as happy as possible - if a T-Series cassette was found to be defective, it was instantly replaced. Super Cassettes never became a member of the IMI5 , and therefore, was under no obligation to follow the organization's guidelines. The company quickly emerged as the biggest competitor to GCI, which even came close to winding up its operations.

By the mid 1980s, T-Series had reportedly stopped the pirated recording business and 'shifted' completely to the legitimate businesses. However, controversies continued to dog the company, with Gulshan coming out with the idea of 'cover versions.' Cover versions were albums that used the musical compositions as well as the lyrics of original well-known Hindi film soundtracks. Fresh recordings were made using the same compositions and lyrics, but with a different orchestra and singers, from the ones used in the original. These recordings were then sold in the same market in which the original soundtrack albums were sold, in most cases with the same title. While some parties took permission before making the recording, others merely sent notices, as required by Rule 21 of the Copyright Rules Act 1958, along with a cheque for a paltry sum towards royalty for the literary and musical works. Cover versions were considered to be legal as long as the makers had acquired permission from the original music companies. The Supreme Court had passed a directive that cover versions done after a period of three years from the release of the original music score were legal.

GULSHAN - PIRATE OR MESSIAH?

[4] Life in the twilight zone, www.rediff.com, September 2, 1997.

[5] The Indian Music Industry (IMI), originally formed in 1936 as the Indian Phonographic Industry, was the recognized trade association of the sound recording industry in India. The association comprised over 50 music companies including both Indian companies and Indian licencees or subsidiaries of international companies. One of IMI's main functions was protecting the rights of producers and fighting the piracy menace.
 

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