South Film Industry letter

Ministry of Commerce & Industry
Dept. of Industrial Policy & Promotion (IPR-VII Section)
Udyog Bhavan, New Delhi 110001

Ref: Office Memorandum F. No. 14-35/2015-CRB/LU (IPR VII) dated 05.09.2016 in relation to Section 31D of the Indian Copyright Act, 1957

Dear Madam,
We, the members of Karnataka Film Chamber of Commerce, are writing to express our sincere concerns in relation to the above captioned Office Memorandum issued by the Department of Industrial Policy and Promotion by which Section 31D is sought to be clarified to include ‘internet’ within the realm of statutory license in India.
You would appreciate that music is an integral part of the film industry. The business of film production and music companies go hand in hand. In order to produce a film, several components need to be created, aligned and brought together including the script, screenplay, sets and most importantly the music. Each of these components are copyrighted works and necessary rights in each of them need to be acquired by the film producers in order to finally create/produce a film.
For doing so, investments are required to be made from various stakeholders, the most principal of which are music labels who invest money in our films to help create soulful music for the film. These music companies acquire the music rights of our films in return for a significant amount which in turn helps us in further promoting our films and using these amounts as investments for producing films in future.
The consideration that we receive from the music companies helps us recoup a lot of our costs and investments in making the film and in turn, helps keep film making a sustainable industry and a viable business. In several cases, we also receive a direct share of revenue from any exploitation of our film or its music on any and all mediums such as the internet, TV, FM Radio, Mobile etc.
We have carefully examined the Office Memorandum in relation to Section 31D of the Indian Copyright Act, 1957 and respectfully disagree with the position taken by the Ministry. We submit that expanding the scope of Statutory License to include ‘internet’ as well would have a disastrous impact on the film and music industry and would put unnecessary fetters on our business.
Internet is one of the primary source of royalties of, both, the film and music industry. The royalties that the music industry receives are passed on to film producers like us in the form of acquisition costs. What the music industry receives determines its capacity to pass on to us and consequently determines the investments we are able to make. The greater the share of royalties the music industry receives, the greater benefit that gets passed on to film makers like us. Any undue fetters on the music industry’s right/freedom to freely negotiate licenses and freely collect royalties at market rates, would consequently have an impact on our capacity to produce films and/or invest in films as well. Undoubtedly, this will affect the film industry as a whole.
We understand that Statutory License is a form of forced expropriation of property of an owner which can only be permitted under our Constitution if done for a public purpose and not for a private purpose. The benefit to public has to be direct and substantial. Not even a single member of public appears to have ever complained of being deprived of free access to a song in India.
In fact, as regards the benefit to public, it is humbly submitted that the public at large already has complete and unhindered access to music companies’ copyrighted content from numerous sources, on various formats and modes of exploitations, and there arises no question of the public being deprived of music content for any reason.
As for the internet companies who directly stand to benefit out of such a mandatory mechanism, please appreciate that – (1) Internet is a thriving industry and most internet streaming organizations are big multinational conglomerates who have absolute capacity to pay fair and equitable rates of royalties to the Indian copyright creators and creative talents but choose not to; (2) these companies do not deserve the benefit of a mandatory licensing mechanism like Statutory Licensing and pay subsidized rates; (3) Internet is a boundary less medium which extends to jurisdictions beyond India and in case the statutory licensing is made applicable on Internet, the same copyrighted content will be subjected to different terms and conditions, when compared within India and outside the territory of India where the Indian Statutory Licensing provision cannot territorially extend to (4) Moreover, Statutory Licensing to all kinds of internet streaming companies or broadcasting organizations would result in legitimizing piracy over the internet as any person can now set up a simple website and communicate our film songs and consequently no one would ever need to enter into any voluntary agreements with us or our music partners.
In light of the aforesaid, we believe that Internet music service providers are not entitled, at present, to communicate to the public copyrighted sound recordings and the underlying literary and musical works under a statutory license. Therefore, we request that you see our concerns and issues in relation to the captioned Office Memorandum and hope that we can work together towards balanced and long-term solutions in relation to the issues at hand.
We are thankful for your time and consideration.

Yours Sincerely

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