The T-Series Story

<< Previous

The Unsolved Problem

Though GCI had won this case against T-Series, the problem of music piracy still plagued the industry. The music companies were handicapped by the legal definition of copyright violation wherein piracy was not a cognizable offence. The companies had to prove that cassettes were being pirated before getting a warrant of arrest. According to certain reports, music pirates were always tipped off about police raids in advance.

The nexus between the film/music industry and the Dubai/Mumbai underworld was another problem. The mafia controlled a large portion of the Mumbai music piracy business. This nexus was so strong that after an IMI raid in the early 1990s in Mumbai, IMI officers were beaten up and its Mumbai office was destroyed. After this, all the markets in that area were closed for 15 days in protest against the raid. According to IMI estimates, almost 95% of the distributors and dealers were involved in piracy and on an average, only 40% of the stock was genuine. Analysts claimed that except for giving leads to the police and initiating raids on pirated music vendors, even the music companies had done precious little to curb music piracy. The problems associated with the distribution network in the music business also substantially helped the pirates. Market observers claimed that around 50 distributors had an absolute control on the music industry's distribution network.

Distribution was the most profitable part of the music business. The average cost of a cassette for the distributors was Rs 19. The selling price ranged from Rs 38 (large retailers) to Rs 44 (small retailers) for a cassette. The retailers added their own margins to the price. The price for the customer thus ranged between Rs 50 and 60.

The problem was compounded by the fact that in the case of film music, if supplies were not made available immediately, the demand shifted either to pirated cassettes or to some other album that was easily available. Thus, it was imperative for the music companies to sell in bulk to the distributors.

The price for the customer thus ranged between Rs 50 and 60. The problem was compounded by the fact that in the case of film music, if supplies were not made available immediately, the demand shifted either to pirated cassettes or to some other album that was easily available. Thus, it was imperative for the music companies to sell in bulk to the distributors.

The companies realized that they had a lot to gain by bypassing this network. The logical solution, though time consuming and costly, was to set up their own music stores. The biggest initiative in this direction had come from Saregama, whose owners, the RPG group had successfully established the Music World chain of music retailing outlets all over the country. The emergence of organized music retailing outfits like Planet M and Internet based stores such as fabmart.com was expected to help the companies improve their performance.

Next >>