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T-SERIES & MUSIC PIRACY
Initially, Gulshan's cover versions featured only old Hindi film songs. Gulshan
got unknown singers to sing these as their rates were low and Gulshan was able
to make good margins on the overall deal. Soon, he began making cover versions
of new movies as well. Though the cassettes always made it clear in small print
that these were not the original recordings, the consumers were not always
savvy enough to read the small print.
During the early 1990s, Gulshan released a number of
albums featuring religious songs. These were fairly successful. He even
acted in, sang for and directed a few of the videos of such songs. These
were run on the state-owned television channel Doordarshan. T-Series also
began producing Hindi films. One of the company's first ventures, the
musical 'Aashiqui,' was a huge success. This was followed by many more
movies, a majority of which flopped. However, the music of these movies
was a success in almost all the cases. The success of 'Bewafa Sanam,' one
of the many mediocre T-Series movies starring Gulshan's actor-brother
Kishen Kumar, took the whole industry by surprise. Gulshan even invented
the concept of the 'music bank' where tunes were stored till a movie or a
record was identified to 'fit' them into.
Things were going on rather smoothly - till Gulshan
released a cover version of what was reportedly one of India's biggest
blockbuster movie, 'Hum Aapke Hain Kaun' in 1997, violating the three-year
waiting period stipulated by the Supreme Court. This time around, the attack on
GCI's profits was too strong to be ignored and the company filed a suit against
T-Series. In the same year, a few music industry players approached the former
finance minister V P Singh, demanding that Gulshan be punished for violating
copyright laws and pirating music. However, V P Singh reportedly6 dismissed
them saying, "Don't come to me with your hard luck stories. You've no marketing
strategies so you haven't discovered the marketplace. Gulshan has. And you want
me to punish him for his entrepreneurial ability?"
As the 'Hum Aapke Hain Kaun' case went to the courts, Gulshan was murdered.
With Gulshan's death began a period of uncertainty for the T-Series group. The
music company was not doing very well as Gulshan had stopped buying music
rights from outside7 and the T-Series' films had failed. The other businesses
were all relatively new and not yet well established. There were reports of
infighting in the family regarding the control of the various businesses.
Saregama, Tips and Venus, who had emerged as the leading players in the Hindi
film music segment, had also ventured into film production. Though Saregama's
movies did not do well, quite a few Venus and Tips movies were huge successes.
The December 1998 Delhi High Court ruling in the 'Hum Aapke Hain Kaun' case,
which put an end to the cover version recordings, was the biggest blow to
T-Series. The High Court order said that the makers of version recordings
relied upon a special provision of the Indian Copyright Act [S 52(1)(j)].
Taking advantage of this provision, the pirates claimed that copyright owners
of the compositions and lyrics were only entitled to a statutory license fee.
They also said that once the owners received the license fee, they had to allow
the fee payers to make sound recordings.
The Delhi High Court held that there was no provision for such automatic
licensing and the sound recordings could be made by third parties only after
they had obtained permission from the copyright owners. The Court held that
under the Copyright Act, assignments and licenses could only be made in
writing. They had to be signed by the assignor/licensee. As GCI had
categorically refused to grant a license/assignment in favor of T-Series and
had also returned the cheque for the royalty amount sent by T-Series, it was
able to win the case.
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
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 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.
GULSHAN - PIRATE OR MESSIAH?
 Life in the twilight zone, www.rediff.com, September
 Gulshan had stopped buying the music rights from non T-Series
producers, alleging that they were charging
exorbitant rates. His decision to produce movies was
also led by the fact that he did not have to buy the
music rights for them. However, after his death,
T-Series began buying the rights to film music again. The
company's sales improved significantly with quite a few
of its soundtracks becoming successes.
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This case study is intended to be used as a basis for class discussion rather
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