The Bootleg Baron

Some will say “Robber Baron” is an appropriate metaphor for T-Series, India’s largest music company. As critics point out, it’s an entity that got there by selling millions of audio cassettes for which it didn’t own copyrights; by exploiting ambiguities in copyright law. “Ji, hamaare business mein to yeh sab chalta hai,” (Sir, all this is normal in our business), a smiling Gulshan Kumar, the company’s founder, had said in an August 1997 interview.

But when 19-year-old Bhushan Kumar took over the reins at T-Series months later, the future was uncertain. The company’s street-smart founder had just been murdered. The group had stretched itself thin by diversifying into unrelated areas. Having built its fortune by sidestepping copyrights, T-Series had lost the trust of most people in Bollywood. And ironically, the piracy demon had turned on the company that had become a large-scale owner of copyrights.

Bhushan Kumar spent his initial days at the helm trying to take on the pirates in the hope that the revenue slide could be arrested. He even hired an anti-piracy crusader, M.M. Satish from the Indian Music Industry (IMI), an industry association. In a country where bootlegged music is more the norm than exception, Satish’s efforts proved fruitless. Even today, “we conduct 3,000 raids a year,” says IMI President Vijay Lazarus. “To make a dent, we should be conducting 35,000-40,000 raids.”

Desperation compelled Kumar to look at new business models. “T-Series quickly saw the writing on the wall. There was no solution to arrest declining music sales,” he recalls. He set his eyes on the model of publishing and licensing, under which songs are licensed to other businesses for public performance or for use in their own operations in return for royalty.

This is not a new concept. But over the decades, it took a backseat as music companies found it easier to sell music to consumers. In most countries, music companies leave the collection of their publishing royalties to third-party entities. In India, industry group Phonographic Performance Limited (PPL) does this job.

T-Series wasn’t part of PPL (some say because its membership was once rejected for abetting piracy), and as a way out, Satish broached the idea of setting up a dedicated publishing business unit.
Kumar quickly realised the potential. In 2003, T-Series PPL (TPPL) was set up to administer publishing and licensing of the company’s music to businesses across India. “My core team and I went after hotels, restaurants, banquet halls and even dance bars,” says Satish.

Soon, hundreds of businesses that played popular film music on their premises were staring at the business end of a T-Series stick, backed by the threat of legal action. T-Series identified over 55 types of businesses that were required to obtain its license for playing music publicly. Many chose to simply sign up and pay, including Taj and the ITC group of hotels, the Future Group’s departmental stores, the Delhi airport and Jet Airways.

T-Series was able to scale up these “ground revenues” (licensing from ground events and physical businesses) from almost nothing to nearly Rs. 30 crore by 2007. This critical mass provided Kumar the upper hand when IMI approached him in 2008 requesting for TPPL to be merged into PPL. In return, T-Series got guaranteed annual revenues that rise each year, regardless of how much PPL is able to collect. Today, it contributes 32 percent to Kumar’s revenues and may well be the engine that propels T-Series into the future.

“We own copyrights to over 1 lakh songs which we’ve accumulated since the 1980s,” says Neeraj Kalyan, who looks after T-Series’ mobile and international ventures and spearheads its legal strategy. “That gives us 60 percent of the market for contemporary music.”

With its ground operations outsourced to PPL, T-Series is now concentrating its attention on other publishing avenues. It is estimated that the company earns around Rs. 40 crore annually from TV channels, radio stations and cable operators which pay for playing its content as it is or for use in their own programming. “We have filed probably a few hundred lawsuits and between 5,000-6,000 FIRs (first information reports) to defend our copyrights in the last five years,” says Rahul Ajatshatru, a lawyer with the Delhi High Court who coordinates T-Series’ legal strategy.

One example is its win against Nirula’s Cornerhouse restaurant in 2007. The court agreed with its contention that hotels and restaurants need to pay the company royalties if they show TV channels playing the company’s music or videos.

Music videos and song visuals from Bollywood are another segment that T-Series has targetted. Today, the company owns copyrights to over 30,000 music videos and makes money every time someone watches a song on TV or on the Internet.

The company is now gunning for Web sites that allow music sharing. At the core of the issue lies T-Series’ assertion that its music videos and songs being made available on such Web sites leads to a loss of potential revenue for itself. A victory would mean significant additional revenue and a radical shift in the legal treatment of online-media sites in India.

Click here to watch the T-Series Video Story.