Piracy batters entertainment industry

“Hey Jai, have you listened to the title-song of the newly-released film showing at Rivoli?”

“Nah, Vikram! The CDs have yet to hit music stores. I am waiting.”

“Which century are you living in, buddy? I already have the songs in my ipod and you are waiting for the CD to come? Come on, take my MP3 CD and download the songs in your laptop.”

“You mean you have the pirated version?”

“Yeah! What else! It is the best - cheap and you have the songs before others!”


The moment a new music album or a film is released, markets are flooded with its pirated versions. Industry incurs huge losses as major chunk of revenue is grabbed by piracy. The degree of piracy in music industry is estimated at 55 per cent leading to a loss of $ 3.5 crore (approximately Rs 140 crore). One of the latest issues is piracy in mobile music industry. It is estimated that around five lakh ring tones per day are illegally downloaded in India. In 2006, total number of raids conducted was over 2,500 with seizures of approximatley 14 lakh CDs and over 20 lakh VCDs. Notwithstanding several anti-piracy laws and acts, these figures surely project an alarming state.


Level of piracy and its causes

Piracy has deeply penetrated the entertainment industry and its grasp is firmly rooted. Dev, music composer and arranger, narrated incident about piracy. He said, “It happened at Andheri station. I went to an ATM while my friend, Bharat, went to a vendor and asked him about the CDs he was selling. A short conversation was sufficient for the vendor to make out that we guys wanted to get our albums released and he offered a deal. This is what is happening at the ground level and I would not be surprised if I find any boot-legged chap becomes a part of the music industry and does a roaring business.” Broadly speaking, entire audio and video industry is worth around 2,500 crore and around 70 to 80 per cent of the revenue goes to piracy.” Sharing his observation, Mr G Dhananjayan, COO, Moser Baer Media Ltd, says, “ Piracy level is almost 80 to 90 per cent due to price variations between original software and pirated one. When price of the official software is high, consumers choose to go for cheaper options, even if these are pirated. In a recently conducted research, it turned out that Indian consumers have ‘no guilty’ of buying pirated goods with most of them saying that they are somehow compelled to buy these since the original comes late and expensive.” According to Mr Kumar S Taurani, MD, Tips Industries Ltd, “Audio piracy has grown multifold in the past two years in the form of MP3, downloads etc.” Mr Mohit Suri, Director, Awaarapan, Kalyug and Woh Lamhe, says, “Piracy has always existed in the market. Visual technology has made survival of piracy much more simpler.” Mr Rajjat A Barjatya, MD, Rajshri Media (P) Limited says, “Films and music are pirated on the day of their release. Besides government loses on tax, it is a huge loss for producers and investors including creative fraternity involved in product-creation. Above all, consumers are unable to enjoy or consume the product in the way it was supposed to be (owing to poor quality copies of films).” Ms Nihira Joshi, playback singer, says, ”Piracy is practiced in India in a very large scale and it’s like cheating in business. Sound quality is not as good as in the original. I feel strongly that people should go for original CDs.” Giving his opinion, Mr Vibhore Khandelwal, Project Supervisor, CGX Films and Animation, Dubai, says, “Piracy is certainly affecting the market in a negative manner. The loss incurred by piracy is building up day by day. Piracy is growing because of easy communication and it’s tough to control.” Mr Ajay Mehra, CEO, Planet M, retail venture of Times group, says, “Piracy is very rampant in all the regions of South East Asia. The practice is particularly high in video products. IMI and organised retailers are trying to curb piracy but eliminating it calls for much more work.”


Government’s role

Despite anti-piracy acts and rules, the practice of piracy is always rampant.  Where does the fault lie? Insufficient laws, lack of organised retail outlets and want of fair pricing are among the faulty factors. The core task lies in enacting and implementing powerful and efficient laws. According to Mr Dhananjayan, “Piracy can be curbed only by stringent rules and punishments. In Tamil Nadu, there is GOONDA'S Act, which enables the police to send any one selling pirated goods in jail for a year. Maharashtra government enacted this rule recently. Unless the government imposes rules and regulations, pirates will continue to dominate the market.” Mr Taurani says, “We have good laws implemented by the government to curb piracy. What we need from the government is a separate judicial system and a dedicated police to curb the crime. IMI is taking steps to curb piracy. We are meeting governments of several states to put piracy under the GOONDA Act (like in Chennai) or NPDA in Maharashtra.” Supporting government initiatives, Mr M M Satish, President, Super Cassettes Industries Ltd, says, “Recently, the government has woken up to the menace of piracy and coming up with an amendment wherein a pirate will be sentenced to a minimum of one year.” Mr Suri says, “People are selling pirated CDs on roadsides in the same way vegetables are sold. It is an open-eye-trade on the road and no one is doing hardly anything about it. Instead of looking at piracy as a ‘criminal offensive issue, the government takes it totally for a moral issue. Today, we are punished with a three-days jail in case we are caught over the mobile while driving.  Why don’t we enact stringent laws and punish piracy.” Mr Dev, music composer, says, “Most of the piracy raids are carried out in Mumbai for it is in the bollywood-centric state. But, the situation in the rest of the country presents quite a sorry and sad state. Mr Mehra says, “ There should be more frequent raids on source and shorter legal process.”



Business affected

Piracy has affected all the major companies. It has caused damages to all the businesses associated to or with entertainment industry. According to Mr Dhananjayan, “We are competing with the pirates by offering low priced (high quality) home videos. Hence, we are not impacted much by pirates. However, pirates in new films impact us owing to hold up period. Here, we ran losses up to 60 to 70 per cent since customers interested in the home videos buy pirated ones.” According to Mr Taurani, 30 to 40 per cent of Tips Industries business has been affected by piracy. As per information given by Mr Barjatya, piracy affects 40 to 50 per cent of Rajshri Films business. Sunidhi Chauhan says, “Piracy is definitely bad and it should be banned. We work hard and try to make good music and if people do not respect it, it is terrible. People should buy original music. Piracy should be wiped out completely from the market.”


Anti-piracy campaigns

Anti-piracy campaigns have made people aware of the losses to the entertainment industry. On such campaigns, Industry professionals have different views. Mr Puri says, “Anti-piracy campaigns are not going to make any big difference in piracy levels in India. Only stringent rules, quick hearing of cases and punishments to wrongdoers will reduce piracy.” For Mr Taurani, “Anti piracy campaigns do help in educating people against piracy. We just need to be more aggressive in our campaigns.” Expressing his view, Mr Barjatya says, “Anti piracy campaigns should be conducted on a regular basis. The problem is big and not at consumer level only. Consumers may not even make out, looking at the packaging, if a VCD or DVD is pirated or original.” Commenting on the same, Ms Smita Jha, Principal Consultant, PricewaterhouseCoopers says, “These campaigns are definitely useful- but they need to be much more and on continuous basis. However, it will ultimately be consumers choice- so if the consumer is able to get the audio/video media of similar quality at a lower price from pirated sources, it will be difficult to stop piracy in that regard.” Mr Savio D’Souza, Secretary General, IMI has a different view on these campaigns, he says, “they are not substantiating that with strong anti piracy action on the ground. If you are just going to advertise and not really take action against people who then do not react to it, then there is a serious problem with what you are doing.”


Internet factor

Today, websites are offering and helping easy downloads. Indian music industry has put in continuous efforts to curb piracy. Mr Dhananjayan says, “Audio piracy cannot be stopped in the current internet dominated world. It is difficult to control it. The best way to counter the offence is that audio companies of offer downloading songs at low prices in the internet. Piracy downloading is not common for films for it requires bigger bandwidth and more time. Hence, video piracy through internet is limited.” Commenting on piracy through internet, Mr Taurani says, “We have to take steps for discussions with all major ISPs to stop all illegal websites and we need government’s support in introducing certain laws so that no ISP encourages these activities.” Piracy through internet can be controlled if measures are taken.” Mr Barjatya talks about the pros and cons of Internet. He is of the opinion that Internet is a boon and a bane as well. It is a boon since it allows content owners to encash contents online in a legitimate way. It is a bane because it makes piracy easier, especially using p2p technology. Content owners should embrace new distribution platforms like the Internet. We have done so with our broadband video portal and have seen great results. Mr D’Souza comments, “Police, public prosecutors, the country largely understands a CD, cassette and mobile chip piracy and it is easy to get people to react and get sensitized to this issue before you talk to them about internet piracy.”


Combating piracy: low pricing

Companies like Moser Baer have come up with low priced and high quality DVDs and VCDs, which are selling very well. Stating on this, Mr D’Souza says, “This is a phenomenon that has started in April this year. Now, whether this will kill piracy or a business model that will work only time will tell.” Talking about low price and high quality products, Mr Dhananjayan says, “Yes, Moser Baer proved that piracy levels could be brought down by offering branded home videos at affordable prices.  Since the launch of Moser Baer, piracy level in the catalogue titles has indeed come down by roughly 50 per cent while in new films, the level still remains the same due to hold up period.” Mr Taurani says, “If reasonable branded stuff is available in the market, then piracy can be controlled. In video market, piracy is not that high for it does not have much repeat-value. But in audio market, we spend huge amounts for acquiring audio rights, promotions, manufacturing and distribution expenses. If we drop prices drastically to match with that of pirated CDs, we are then unable to cover our costs.” Supporting this point, Mr Satish says, “The strategy of bringing down price has demoralised the pirates to a certain extent. Constant raids somehow dent pirates and such raids will have an effect of deterring customers from buying pirated VCDs and DVDs.” Complementing this point, Mr Suri says, “ As a consumer, my first loyalty is towards price and then to the quality. If you can compete with the pirated cost, you can control piracy to large extents and make indeed their survival difficult.” Mr Barjatya says, “Lower pricing of original products will have an adverse impact on piracy. However, we have to see whether lowering price is feasible or not from business point of view.”



Futuristic vision

Bad activities have their time but they come ultimately to an end. Expressing his view, Mr Satish says, “One has at least to be at par with technology if not ahead of. The future is ‘Digital’: soon, one will have the facility to download songs directly from the satellite onto their I-pods. The solution would be to have coupons available in denominations up to Rs 100. You can download an old song for as less as Rs 2/- and the latest top of chart track for Rs 10/- or 12/-. This is purely my observation and vision that we are very near to the days when technology itself will kill piracy.” Mr Suri says, “Piracy needs to be taken more seriously. Everyone’s saying that it’s a moral issue will not end the problem. The government has to be much more stringent. It is an unfair trade practice that is affecting the whole industry.” Industry people have their opinion about piracy but the industry has to do a lot in terms of price-cutting while distribution network has to be strong enough to reach every nook and corner of the country. Adding to it, Ms Jha says, “Piracy is difficult to eliminate completely. However, with robust DRM technologies for the new digital media, these can be contained to a significant level.”

Stay on top – Get the daily news from Indian Retailer in your inbox