FUTURE OF MUSIC INDUSTRY AND THE ROLE OF IPR

WITH SPECIAL EMPHASIS ON MODERN DAY PROBLEMS

LIKE
‘VERSION RECORDINGS’
AND
‘P2P MUSIC DOWNLOADING’

By

Ankit Relan
 Introduction

With the ever rampant advance in technology the music industry, like many other
modern day industries, has been exposed to various challenges, both at the micro as well
as macro level to sustain itself and keep pace with the needs of today. Technology has
today made the classic business model of production, selling and distribution of music in
physical form increasingly redundant and as a result the CDs, DVDs, blue-rays discs
which were considered as the next big thing in music distribution not long ago have
slowly become commercially superfluous. While the macro level takes stock of the music
labels, recording companies and distribution houses that are struggling to keep a check
on the unauthorized access/downloading of music on the internet through the means of
Peer-to-Peer data sharing (P2P) and the loss of royalties resulting from it; the micro level,
on the other hand, relates to individual music composers, song-writers, sound engineers,
performers etc. whose biggest threat comes in the form of digitization of the process of
song making itself with the increasing use of music simulation software and digital
instruments/samplers that help unauthorized remixing, re-mastering of their songs
and/or otherwise facilitate the making of „„version recordings‟‟ of their songs and hence
creating a confusing overlap of rights. With re-recording, distribution and earning
publicity through cover versions of already popular songs becoming a hit with the
upcoming musicians, it is a great challenge before the legal system of our country to
regulate and reconcile the necessity of advancing technologically in keeping terms with
the rights and interests of the original creators who unwillingly and unknowingly lose
out on hard earned fruits of their labour.

There have been numerous studies in the last two decades which have carried out an
impact assessment of the digitization of the music industry and a majority of such studies
have indicated a clear and steady decline in the music business. The music industry, it is
widely believed, is in the transition of becoming a digital marketplace. The argument
often cited by such studies against digital media is that the technology has shrunk the
international borders and has allowed for easy availability and instant accessibility of any
work posted on the web sitting from almost anywhere in the world. While availability of
any data to the masses is not by itself harmful, but it is the fact that such access of data is
often unregulated, untraceable and most significantly a reason for loss of large revenue in
the form of royalty to the owners, is where the problem lies.

Intellectual property laws and more particularly the Copyright Law governs the key
issues of access, availability and use of original creations while also regulating the
manner in which any work/creation may be used by public in order for it to not be
infringing of the interests of the owner of the work. An attempt has been made by way of
the present submission to understand and analyse the position in respect of two of the
most prevalent modern day challenges before the Music Industry i.e. Firstly, the
increasing use of “version recordings” to create parallel rights in the same song which,
broadly speaking, raises the issue of illegal copying and unauthorized alteration of a
work which is a moral right of an author/composer of the song and as a result of which,
the whole mindset of producing original and lasting song compositions has taken a
serious hit in the industry; Secondly, the issue of unauthorized sharing and illegal
downloading of songs through Peer-to-Peer network services that raises the issue of
illegal copying, storage and distribution of a work by end-users who are mostly
untraceable and cannot effectively be prevented absolutely from such activities. By way
of the present article, I will try to explain the concepts involved, the underlying issues,
the judicial and legal position as well as the way forward in respect of both the above-
said problems.

Version Recordings

The concept of version recordings

The term version recording is not defined under the Indian Copyright law however the
Delhi High Court has attempted to define it as a sound recording made of an already
published song by using another voice or voices and with different musicians and arrangers.1
Simply stated, it is another version of an already existing song which is neither a copy
nor a reproduction of the earlier sound recording.

Outside of India, „version recordings‟ are popularly known as „cover versions‟ of songs.
Over the years there have been many different types of cover versions of classic songs
each version differing in the treatment, style and sometimes even in the genre from the
original song. The multiple versions of the famous song „Knocking on Heaven‟s Door‟
by Bob Dylan is a case in point where the same song was sung by some of the well
known artists such as Arthur Louise in a blues-rock genre, Eric Clapton in a reggae
influenced version, Guns „N‟ Roses in a live version, Avril Lavigne in a various-artists
version.2 „Version recordings‟ however are to be contradistinguished from remixed/re-
mastered versions of a song. While a remix is nothing more than a „cosmetic derivative‟
of the main song where only the mixing or beat sampling of the original song is re-done
taking the original recording itself; in case of a version recording a new rendition of the
same song is recorded from the scratch using the original song (lyrics and melody) as an
aesthetic base but not directly using the original song recording itself.

Issue Analysis: Where lies the problem?

With regard to unauthorized remixing of a song the situation in law is not too difficult to
understand since such an act results in non-permitted use/alteration of the original song

1
Gramophone Company of India v. Super Cassette Industries Ltd. [1999 PTC 252 (Delhi)] also approved in
[2010 (44) PTC 541 (Del.)]
2
http://en.wikipedia.org/wiki/Knockin'_on_Heaven's_Door
clearly amounting to copyright infringement under the law. Moreover, copyright law
requires that a work must be „original’ in order for it to have independent copyright and a
remixed song being at best a cosmetic alteration of the original song, it is extremely
difficult to establish the element of distinguishable originality in the same. While, on the
other hand, the case of unauthorized creation of a version recording presents us with a
tricky set of questions such as whether such versions require the consent of all copyright
owners in a song i.e. lyricist, composer, producer of recording etc; what is the legal status
of a version recording vis-a-vis any ordinary recording; whether a version recording can
be permitted to allow material alterations in a work etc.

Position under the Indian Copyright Act, 1957

The Indian Copyright Act, at present, neither specifically recognizes nor provides for
„„version recordings‟‟, however, the Copyright (Amendment) Bill of 2010 has sought to
introduce a specific provision as Section 31C which has been curiously titled „Statutory
License For Cover Versions‟3 which for the first time recognizes the term „cover version‟ as
being a sound recording in respect of any literary, dramatic or musical work where sound recordings
of that work have been made by or with license or consent of the owner of right in the work. The
said definition, on the face of it appears too broad and vague and includes any
subsequent recording of a pre-recorded song as a cover version when infact there exist
crucial differences between any subsequent recording and a version recording of a song
as explained in following parts of the present submission. The said proposed Section 31C
is akin to Section 52(1)(j) of the present act with respect to its structuring and content in
so far as both the said sections provide for a set of pre-conditions that any person
intending to make a version recording must fulfil in order to escape liability from
copyright infringement under the Act. The crucial difference between the two, as it
appears on the face of it, is that while section 52(1)(j) is in the nature of an exception to
copyright infringement, the proposed Section 31C is in the nature of a „statutory license‟
that can be positively asserted against the principle owners of work should the
preconditions be reasonably satisfied.

In practice, section 52(1)(j) has often been at the receiving end of various disputes
revolving around the very legal status of „„version recordings‟‟ vis-a-vis any ordinary
sound recordings in India. Various High Courts have given differing opinions on the said
issue and the matter is yet to be afforded judicial/statutory finality in India. The recent
Delhi High Court ruling in Gramophone Company’s Case4 however, has held in categorical
terms that a version recording is a separate work capable of having independent
copyright under the law and accordingly all rights available to any normal sound
recording (vide section 14(d) are also equally applicable to a version recording provided the
same fulfils the criteria set out in section 52(1)(j)
3
The Copyright (Amendment) Bill, 2010, see online text at,
http://www.prsindia.org/uploads/media/Copyright%20Act/The%20Copyright%20Bill%202010.pdf
4
2010 (44) PTC 541 (Del.)
On a bare understanding of the provision it is submitted that Section 52(1)(j) permits
making of a sound recording of any literary, dramatic or musical work provided, inter-
alia, if before making the subsequent recording the consent of the owner(s) of the
respective works is obtained, 2 years have elapsed since the publishing of the original
sound recording and that the copied version does not contain any material alterations to
the original song which are not necessary in nature. In a series of judgments, various
high courts have almost unanimously held that the consent of the owner of the respective
works before making of a version recording to be of utmost significance.5 Furthermore, it
has also been held that a version recording by its mere proximity with the sound
recording of the original song does not by itself become infringing to such recording. If a
version recording has been made with the consent of the owners of the literary, musical
works contained in the song, the owner of the original sound recording cannot then
object to the version recording since in view of Section 13(4) of the act the copyright in
the original sound recording is separate from the copyright vested in the literary, musical
work contained in the original song and thus limited to that extent only. It is only when
the original sound recording itself is embodied in the version recording that a case of
infringement could be claimed by the owner of such original sound recording and not
otherwise.

The criticism of Section 52 (1) (j) has come primarily from the music industry which is
the worst affected by it on the ground that the said section, in practical effect, has
curtailed the exclusive right of distribution and copying a sound recording from 60 years
to virtually 2 years. Further argued that under the said section, merely by giving a notice
to the owner of the song of which authorized recordings have already been made in the
past any person can make a subsequent recording of the same and the section does not
require for specific approval of the owner to such notice. Moreover, the royalty to be
paid to the owner being not fixed, can easily be under-paid by under-reporting the value
of sale proceeds by a new recorder.

Way Forward – Statutory License of Cover Versions

The proposed section 31C serves as an effective answer to some of the above problems in
as much as the said section most crucially makes the requirement of prior notice to the
owner of the original works as well as service of advance copies to him a pre-requisite for
making a cover version.6 The said section also increases the waiting period before
making of a cover version from 2 years to 5 years7 and also amends the royalty clause to

5
In Gramophone Company of India v. Super Cassette Industries Ltd. (1999 PTC 252 (Delhi)); Music India Ltd V.
M/S Super Cassettes Industrial Pvt. Ltd & Others (1987 PTC (Bombay) 83); Gramophone Company of India Ltd
v. Supper Cassette Industries Ltd. (1999 PTC 2 (Delhi)
6
Proposed S. 31C (3), The Copyright (Amendment) Bill, 2010, see online text at,
http://www.prsindia.org/uploads/media/Copyright%20Act/The%20Copyright%20Bill%202010.pdf
7
Ibid.
now make it mandatory for the person to pay an advance royalty8 to the owner while
giving Copyright Board the final right to determine the rate matters of royalty in the said
section.9 The proposed law also makes it mandatory for the person to pay to the owner a
royalty of a minimum of 50,000 copies of the song in the year when such cover version is
first published.

Though the proposed amendment brings in a lot of desirable changes to the present law
in respect of cover versions, one must not lose sight of the fact that the most basic
question that a cover version raises is that of possible violation of an author‟s moral
rights in his creation. Under the present law as well as the proposed section 31C there is
a statutory requirement that the cover version must not contain any material alteration to
the original work unless it is technically necessary. What alterations may thus be
permitted is an open ended question and whether once the making of recording is not
objected by the owner, can the owner, subsequently seek recourse to his moral rights
under section 57 if the cover version goes onto tarnish the integrity of the original work
itself at a later stage. Will the owner not be stopped then from retracting from his consent
to such work? As a solution to the same, it is proposed that there must be a dual system
of consent to making of a cover recording i.e. firstly before making such recording and
secondly, after the recording is completed a confirmatory consent must be taken of the
final product from the respective owner(s) of the work. Moreover, it is also suggested
that the consent under the said act must necessarily be an express consent and not merely
an implied one since copyright is in the nature of a personal right and no author should
be deprived of his rights in a work under the garb of implied acceptance/consent.

Peer-to-Peer Music Sharing

The concept of Peer-to-Peer networking

A P2P network as it is often termed, is a service that enables its users to connect with
other computers on a common network and share data such as the stored MP3 music
files over the internet. A P2P network is created with the help of software designed for
the said purpose which can be easily downloaded by users from the net. A P2P network
creates a virtual community of all users who have downloaded such software and have
become a part of the network through the software which users can then gain access to
the files/data in each other‟s computer which are earmarked for sharing purposes.

Identifying the Problem & Issue Analysis

While the above elaborated P2P service has great utility in distributing data to a large
number of people within virtually no time at negligible and/or no costs, there is also a
8
Proposed S. 31C (4), Id.
9
Proposed S. 31C (5), Id.
significant downside to this service as was for the first time brought to light in the well
known NAPSTER10 case in 1999. In the said case, the Recording Industry Association of
America (RIAA) had initiated copyright infringement proceedings against the company
Napster which had developed a P2P file sharing software by the same name, accusing it
of facilitating music piracy through the said software. It was argued by RIAA that an
average computer has a hard drive of 80GB (81920 MB) and an average song is of 3MB;
thus an average user can store upto 27306 songs of 3 MB each in his computer which
amounts to almost 1950 albums of 14 songs each. In view of the US Supreme Court, the
advancement of broadband technology combined with P2P network acted as a facilitator
for illegal downloading of almost 27306 songs on each user‟s computer most of which
was free of cost thus resulting in heavy losses of both the distribution revenue as well as
individual royalties to the artists. It was also observed that Napster was alone responsible
for around 30% decline in the music sales that year. The copyright infringement was
made out because NAPSTER offered a centralized server system which at least
temporarily stored and digitally copied the music on its server. Post NAPSTER there
have been numerous disputes between music associations and P2P network service
providers such as Gnutella or BitTorrent who, like NAPSTER, were held liable for
copyright infringement for not only creating unauthorized copies of digital songs but
also, by way of providing a central server, allowed users to make multiple copies of such
songs.

The Grokster Development

While a new technology like P2P could have significantly lawful purposes it could also
at the same time be used for unlawful/infringing purposes. The issue really is how to
balance the equities and ensure that the need of society to advance is harmonized with
the rights of the copyright owners. In the landmark Grokster case11, the US Supreme
Court gave a well visioned observation while dealing with yet another P2P technology
based case, that merely because a technology has the potential of being used unlawfully
by the end user does not by itself establish a wrong on the part of the owner of such
technology. What is of utmost importance in establishing infringement in such a case is
to show that some affirmative steps to foster or induce infringement have been taken by
the owner of such technology. The biggest problem before the music industry is that the
illegal data transfer through P2P is untraceable and liability can not practically be fixed
upon the multiple end users who are illegally downloading the music sitting at different
ends of the world. For this reason, the music industry has always attempted to hold
culprit, the distributor itself i.e. the P2P service provider as a contributory infringer. The
Grokster principle has however given the P2P providers a shot in the arm by giving an
equitable view, as explained above whereby, until and unless actual evidence of

10
A&M Records Inc. et al v. Napster Inc., No. 00-16401, U.S. Supreme Court, See online text available at
http://www.copyright.gov/docs/napsteramicus.html
11
MGM Studios Inc. et al v. Grokster Ltd., 545 U.S. 913 (2005), see online summary available at
http://en.wikipedia.org/wiki/MGM_Studios,_Inc._v._Grokster,_Ltd.
affirmative contribution is shown on the part of the P2P provider, he will escape any
liability under the law.

Position under the Indian Law

In India, the copyright law provides the copyright owner of a sound recording the
exclusive right to make as well as offer for sale/hire copies of his song recording 12. Any
unauthorized copying, whether done through the medium of internet, P2P sharing or
otherwise, thus, in submission of author, would amount to infringement under the
present scheme of Indian copyright law. To the knowledge of the writer, there has not
been a single case in the above context in India however the language of the statute is
broad enough to be interpreted accordingly. The concept and above cited reasoning of
Grokster case has been recently approved by Madras High Court13 though in a slightly
different context where the High Court approved the above principle of there being direct
evidence to show inducement on the part of the P2P network creator upon the end-users
so as to abet or contribute to the infringement.

Way Forward – Digital Rights Management

In view of the above, the position that now emerges is that while P2P service by itself
cannot be termed as an infringing technology, it is also very difficult to track and fix
liability on each end-user who commits an illegal use of P2P technology. Moreover, such
end-users sitting under different jurisdictions of the world is also likely to escape
punishment in view of the fact that each jurisdiction will be governed by its domestic
laws which are likely to have different standards of copyright infringement culpability.
What is thus needed is a technology that helps in better encryption of such shared music
files which not only prevents copying of songs, but also keeps a track of the users
downloading/copying each song as well as the number of times a song has been copied
by such user.

The recently developed „Digital Rights Management‟ systems afford such an avenue to
the copyright owners. DRM technologies attempt to control use of digital media by
preventing access, copying or conversion to other formats by end users. DRM
technologies enable publishers to enforce access policies that not only disallow copyright
infringements, but also prevent lawful fair use of copyrighted works, or even implement
use constraints on non-copyrighted works that they distribute; examples include the
placement of DRM on certain public-domain or open-licensed e-books, or DRM
included in consumer electronic devices that time-shift (and apply DRM to) both
copyrighted and non-copyrighted works.14

12
Section 14(h), The Copyright Act, 1957
13
Consim Info Pvt. Ltd vs Google India, (C.S.No.832 of 2009), see online text available at
http://indiankanoon.org/doc/586984/
14
http://en.wikipedia.org/wiki/Digital_rights_management
The DRM technologies help owners ensure that a particular song is used, distributed,
and run by an end-user only in desired terms and conditions of the owner such as, a song
file could be restricted to run only on a SONY music players or copying/downloading of
a file would require either a password that can be obtained only by way of license or by
payment of a minimum cost/royalty for each of such songs. In effect, DRM helps in
regulating use of a copyright work yet at the same time ensuring that a work is not
unreasonably withheld from the public as per the whims of the owner.

In India, the Copyright Amendment Bill, 2010 has proposed two specific provisions
being Section 65A15 and 65B16 to recognize the above technologies and makes it criminally
punishable to circumvent any such technological measure taken to protect copyright in a
work. The said provisions make it a criminal offense to intentionally circumvent any
effective technological measure or removal/alteration of any rights management
information (as defined under section proposed section 2(xa)) being punishable for
imprisonment upto 2 years and fine in addition to the already available civil remedies
with the owner of copyright in such work.

Conclusion

“Omnis enim res quae dando non deficit, dum habetur et non datur, nondum habetur quomodo
habenda est”17
~ Aurelius Augustine (354 – 430)

Experience tells us that growth, wherever it may be, should not only be controlled but
also channelized for it to be most productive. While sharing of data through digital
medium is a modern day reality that cannot be subsided, it is imperative that technology
itself is moulded to include sufficient encryption measures as well as simultaneously
making the public aware of the rights of the copyright owner and limits to which they
can use a protected work so as to balance the equities and have a win-win situation
where the interests of both sides are safeguarded. Sharing results in easy distribution of
work and hence allows for mass listenership and appeal to a wider and varied audience
all across the world. Laws governing use and access of digital data need to be made,
amended and also interpreted with a mindset so as to promote sharing of data and
advancement of arts in society even if it calls for subjugation of „commercial rights‟ of the
creator to some levels. Of course, the act of balancing the equities would require an
affirmative waiver of vested interests from both sides but the focus should be towards the

15
Proposed section 65 A titled ‘Protection of technological measures’, for full text see
http://www.prsindia.org/uploads/media/Copyright%20Act/The%20Copyright%20Bill%202010.pdf
16
Proposed section 65 B titled ‘Protection of Rights Management Information’, for full text see
http://www.prsindia.org/uploads/media/Copyright%20Act/The%20Copyright%20Bill%202010.pdf
17
“For if a thing is not diminished by being shared with others, it is not rightly owned if it is only owned and not
shared”.
benefit of public at large made in no-unreasonable terms. It is also at the same
commercially advisable that along with such encryption measures the costs for use of
such work are decreased parallelly to a more realistic and appealing level since the
introduction of digital media virtually reduces the cost of production, distribution of each
song to negligible amounts and the whole argument of the music industry that the costs
of buying an album must necessarily include the costs of manufacturing CDs,
distribution and supply goes out of the window. Reduction of costs will act as an
incentive to the users/consumers who would feel obliged to enjoy a better quality of
work on payment of bare minimum costs and also have ease/portability of access of the
songs. The DRMs are a major step forward in the above regard.

The music industry in India needs to recognize the importance of DRMs and implement
it at both the macro as well as the micro level. At the same time it is important for the
industry to not lose sight of the fact that consumers are the key to advancement of any
industry and it is imperative for the industry to not turn its back upon the consumers by
taking an over-stringent stand against unauthorized copying/distribution of their work.
The industry needs to bypass the present situation by implementing better rewarding
schemes for users/consumers so that they rather resort to authorized means than illegally
using the digital media.

While it is hard to predict the future of music industry, it is advisable to rather focus on
getting the processes right and setting a good platform for the industry to have a better
managed present and hopefully a more secure near future.