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When we discuss copyright in cinema, there are four distinct groups. The original producers of a cinema, who are the sole rightholders, can sell cinematographic rights, Video rights, Cable rights, commercial rights and satellite rights. In the eyes of the law copyright in cinema has five components and each of the five components are divided again into three distinct parts. These are:

1. Cinematic Rights  

   • Theatrical

   • Non theatrical

   • Public Video

   2.    Ancillary Rights

• Airline

• Ship

• Hotel

   3.    Video Rights  

• Home rental

• Home see through

• Commercial

   4.   Pay TV Rights

• Terrestrial

• Cable

• Satellite

   5.   Free TV Rights

• Terrestrial

• Cable

• Satellite                   

It is generally mentioned in the agreement under which of the above the rights are sold. For example, if cinematic rights were sold, the agreement would state whether rights were sold for showing in theatres or other places or for showing to public through video. The agreement would also clearly mention the duration and territory over which one has the right. If one has the right to show only in theatres (mainly the distributors in the case of India) then the buyer does not necessarily have the right to show these movies through video or through any other media to the public. If he does, then it would be a clear violation of the copyright law. Similar is the situation in case of  Pay Vs Non Pay TV rights. A TV company may run Pay TV channel as well as Free TV channel for the public. The TV company might buy right to show a film through its pay TV channels. But if the company showed this film in their free to air channels then it would be a violation of the copyright law. There has been instances where some satellite channels had violated copyright in this manner. However, these instances are not many and account for a very small part of the total violations in cinematographic works including cable and home video violations.

It has been observed from discussions with various producers & distributors of films, video & cable right holders and satellite channels, that copyright violations of films occur mainly in video, cable and commercial rights, i.e. showing movies through video parlours (which at present are prevalent only in the rural India) and at hotels to a large extent. In fact, while interacting with some of the film producers, it was not clear whether commercial rights of films have even been sold at all. Most of the hotels are connected through cable operators while some of them (mainly in the 5 star and 4 star categories) have their own dish antenna and in some cases they show movies through their VCRs. Our discussions on the extent and nature of copyright violations will be mainly related to video Rights, Cable rights and commercial rights only.

Home Video

Video rights are generally sold for home rental and home see through. In the case of home rental rights, the right holders after producing the cassettes rent these out to the homes for a specified time for which some fees are charged. They mostly arrange these through the video libraries. Similarly, for home see through the video cassettes can be bought from dealers/shops etc. and can be seen at home only. However, in both the cases, these video cassettes cannot be utilised for cable or any other commercial purposes e.g. showing in video parlour, hotels, transport carriers, etc. If the cassettes are used for any of these commercial purposes it would be violation under Indian copyright law.InIndia, though home rental rights and home see through rights exist as per the law, however in practice the video cassette producers buy rights for home video only. They, in turn, do not produce cassettes exclusively for home rental or home see through. According to them persons can either borrow the cassettes from video libraries or buy from the dealers/retailers to see them at home. However, depending on the popularity of the films, these cassettes are infringed in the sense that mass copies of these are made by the violators alongwith printing of inlay cards, etc. It is very difficult for endusers to know whether they are original or infringed by merely looking at these cassettes. Not only are cassettes infringed, but some are also involved in making back to back copies. These are mainly done at video libraries most of whom have VCRs with them. The video libraries in turn rented/sold these to the customers. These can be easily identified as duplicates since there will not be any inlay card or any certification from the authorities. These kinds of cassettes may at the most have photocopies of the certificate stuck on top of the cassette cover.

Another form of copyright violation in the video is that even if the producers have not sold the right for a film, the same can be seen in cable network as well as cassettes containing such films can be borrowed/bought from video libraries/shops. This takes place mainly in two forms :

1. through laser disc brought from abroad 
2. With the help of camera print taken from the movie halls when the movie is in progress.

As per the law, one can bring a laser disc containing movie from abroad for home viewing only. When the films are released abroad these are copied in laser discs and brought back to India from which mass copies in video cassettes are made. Similarly, when the movies are shown in theatre halls, the films are shot clandestinely from the screen with the help of a video camera. Then it is made into mass copies. The prints of such movies are generally of low quality and one can easily identify this while viewing on TV.

Movies are also brought to the homes by the cable network. Since cable network is a commercial venture, movies shown through cable are required to have the authorisation from the right holders. The cable operators violate the provision of the law while showing movies of camera print, home viewing cassettes and infringed copies. More will be discussed with respect to cable right violation in the later part of this chapter.

Another form of rights arising in case of  cinematographic works is known as commercial rights or ancillary rights. These are rights taken for showing movies through cable or home video that normally, by law, cannot be  shown in commercial places. But in India, commercial rights at present are virtually non-existent. Most of the hotels barring some five  and four star hotels are connected through cable operators and whichever movies the cable operators are showing through their cables or in house VCRs are shown in the hotels. This can be taken as copyright violation from the point of view of commercial right of movies

India produces the largest number of feature films in the world. During the years 1931 to 1996, India has produced 27809 feature films in various languages. The share of Hindi Films was about 29 per cent while that of Tamil and Telugu films, was about 18 and 17 per cent respectively. These three languages accounted for nearly two-thirds of the total films produced till now. About a fourth (25%) of the films produced were in Bengali, Kannada and Malayalam. During 1996, of the total 683 films produced, 126 (18 percent) were in Hindi, 154 (22.5 cent) were in Tamil, 138 (20.2 percent) were in Telugu, 85 (12.4 percent) were in Kannada, and 65 (9.5 percent) were in Malayalam.

The total turnover of the film industry during 1996 was about Rs.2500 crores. This turnover is worked out only from the films shown in the cinema houses. As per the official statistics, there are 12623 cinema houses spread all over the country with an audience of about nine to ten crores per week. Taking the audience of about 9 crores per week, number of persons visiting the cinema houses annually work out to be 468 crores. Even if we take a conservative estimate of only Rs. 5 per seat on an average this works out to be about Rs.2340 crores, i.e. to say about Rs.2500 crores.  A 30 percent entertainment tax, would yield about Rs. 750 crores as tax revenue to the  authorities.

With the liberalisation of the economy, Indian Television was also thrown open to other satellite channels. With this the home entertainment industry has gone through revolutionary changes. The satellite channels are clamouring for an increase in their viewership and are offering varieties of entertainment through their channels. Added to this are the cable networks which have been instrumental in bringing these satellite channels to the homes. Since it is cost prohibitive for an individual to get connection of the satellite channels through dish antenna the households are receiving the satellite channels through cable network only.

There are no reliable estimates of cable and satellite (C & S) households connection in the country. Generally cable operators underplay their figures in order to conceal their revenue earned from the fees collected from their connected households. According to the studies conducted by Margsat, NRS '95, IRS '96 for Zee Television, it was estimated that there were about 20.8 million cable households in India as on 1996, covering about 12 percent of the total households in the country. Because of the high returns compared to the investments made, large industrial groups including multinationals are showing great interest in cable industry. This may be the reason  behind most of the small independent operators which existed about 2 years back had ceased to operate or had become franchisees (sub operators) of large cable operators like Siticable and Incable in all major cities,   the exception being Chennai and relatively small cities. 

Cable Right Violations

There are only a few companies  which buy cable right from the producers (in case of Hindi films, there are two main companies). These companies after procuring the rights produce the video cassettes, which , in turn, rented out to the cable operators on a license fee basis. On an average they charge Rs.5 per connection per month for 30 movies. These cassettes can not be bought from the market.

The cable right violations of movies can be classified into following categories;

1. Movies for which cable rights are not sold at all sometimes get transmitted in the cable network.

2. Movies for which only home video rights are sold are relayed to the public in cable network (quite common among the small independent operators and the franchisees of big operators

3. Someone buys cable rights and after producing the cassettes sends them to his members/subscribers on a license fee basis. Some cable operators do not subscribe to this but continue to show these movies in their cable network by borrowing from video libraries/buying cassettes from market which are only for home viewing.

4. Infringed home video copies (popularly known as duplicate video cassettes) are also relayed in the cable network. 

The estimate of 20.8 million cable and satellite (C&S) households by Zee Television works out to be about 49.6 percent of the total urban households in India as on 1997. This seems to be a tall order. It was observed that 28.5 per cent households in Delhi, 40.8 percent households in Mumbai and 25 percent households in Chennai have cable connections. This shows that Zee Television estimation on C&S households for all India is higher than even cities like Mumbai and Delhi where it is believed that the concentration of cable viewership is maximum in the country. Therefore, for estimation of cable piracy and associated economic loss we opt for an alternative measure of cable households in the country. Our estimation is based on the percentage of total urban households in India on the assumption that only urban households have access to cable television.

The  estimation is worked out for the cities having population of one million or more. The assumption is that it is only in these cities there exist severe competition among the cable operators. As a result, the  cable operators try to woo as many customers as possible by providing various programmes through their VCR channels. Many of the franchisees and small independent cable operators offer the new releases for which cable rights or in some cases even home video rights are not sold at all.

As per the Census 1991, 23 cities each had a population of one million or more. As per our estimation based on the growth rate of urban population between 1981 and 1991, another 4 cities would have been added to this list by 1997. The city wise estimated population for these 27 urban centres are presented in table 3.1. As mentioned earlier, in the year 1997 about 28.5% households in Delhi, 40.8% households in Mumbai and 25% households in Chennai had access to the cable television. We assume that in the remaining 24 cities also about 25 per cent households are connected to the cable network. Based on an average size of 5 persons per household and the above information and assumptions on cable connectivity in the country, it can be estimated that during 1997 about 50 lakhs of households located in 27 cities had cable connection (table 3.1).

If we assume that the spread of cable network in the country is wider and include urban centres having population of 5 lakh and more , the number of cable and satellite households in the country is estimated to be 91.8 lakhs in 1997. This is based on the assumption of 25 per cent cable connectivity across the places.  With a monthly fee of Rs. 100/- per connection the turnover from the country’s cable industry is worked out to be Rs. 1101.60 crores i.e. about Rs. 1100 crores per annum (in the year 1997).

From the discussions with some cable operators, cable households and through our survey of cable operators and cable homes in the six cities selected for the present study, it was found that the two large operators viz. Siticable and Incablenet operating through their franchisees (sub operators) constitute about 80 to 90 per cent of the total cable connections except in Chennai where small independent operators dominate the cable network. For example, in Delhi, about 80 percent of the cable homes is controlled by Siticable and Incablenet put together. The majority of the franchisees also run their own VCR channels to show various programmes including movies. Most of the films shown through their VCRs are either borrowed from video libraries or bought from the retailers. This is done in order to attract more customers because of the keen competition among the operators. It is also observed that the franchisees do not take cable right independently. Generally the franchisers buy the rights from the cable right holders on a license fee basis besides buying rights on their own. In this case, the franchisees are like relaying stations. But franchisees have the option to block channels and show their own programmes like movies through VCR. 

From our survey of the independent cable operators as well as the franchisees, it was observed that on an average at least two movies per day are shown by each cable operator across the country in their VCR channels (main operator i.e. franchisers are excluded). When asked about the sources of procuring video cassettes for showing movies in the cable, 34 (85%) of the 40 cable operators, who responded to this question, mentioned that they were procuring cassettes either on a rental basis from video libraries or on outright purchase from the retailers or borrowed from friends or relatives. All  these are blatant violations of copyright laws.

More importantly, about 27 (68%) cable operators admitted that they procure 100 percent of the cassettes shown in their VCRs on rental basis from the video libraries. Forty nine (55%) out of the total 89 responding cable operators did not provide any information on their sources of procuring video cassettes and, in all probabilities, they might be  borrowing cassettes from libraries or buying from retailers, which are meant for home viewing only.

It was learnt from discussions with cable operators that cable right holders of movies charge the cable operators an average of Rs.5 per connection per month for supply of 30 video cassettes a month (i.e. one cassette a day) as license fees. As mentioned earlier, the survey of cable operators revealed that about 85% of them are showing 2 video cassettes daily in violation of copyright laws. It could  therefore be estimated that 85 per cent of the 49.6 lakhs cable homes, i.e. 42.16 lakhs households, in 27 cities having more than 10 lakhs population each, are viewing at least two pirated cassettes per day. This violation in monetary term would be about Rs. 5059.20 lakhs (Rs.5 X 2 cassettes X 42.16 lakh cable homes X 12 months) annually. If we cover the cities having more than 5 lakhs population, the total violations of cable rights in India works out to be about Rs.9363.60 lakhs (Rs. 5 X 85 % of 91.8 X 12). This is about 8.5% of the total cable market in the country.

Let us now take the case of the city of Delhi alone. It is reported that there are 6 lakhs cable homes in Delhi (Table 3.1). It is also reported that Siticable and Incablenet together covers 80 percent of the total cable homes in the city. The remaining 20 per cent i.e. about 1.2 lakhs cable homes is controlled by other small independent operators. Based on the discussions with some of the independent operators and cable viewers (end users) at various localities in Delhi and the cable right holders it was observed that independent operators on an average show 3 films a day  for which they do not have the rights. Thus, following the above methodology, the total violations in monetary terms by the Delhi based independent operators (barring Siticable and Incablenet operators) would be about Rs.216 lakhs based on a license fee of Rs. 5 per connection per month for 30 cassettes.

It is generally found that large franchisers like Siticable and Incablenet do not violate cable rights though there have always been allegations and counter allegations of violation of the movies for which they have the cable right. But the franchisees (sub operators) of these two large cable operators show at least one movie a day to their subscribers through their own VCR channels by blocking the programmes shown by the franchisers. Such operators serve about 80 per cent of the total cable homes in Delhi. That is to say that 4.8 lakh (80% of 6 lakh) cable households are watching one movie in a day in violation of copyright laws.  This works out to be about Rs.288 lakhs in a year (1997) which is estimated based on Rs.5 per connection per month. Thus the total cable right violations i.e. violation by independent operators as well as sub operators in a year in Delhi alone is estimated to be about Rs.504 lakhs (Rs.216+288), which is 7% of the total income from the cable industry. The income from the cable network in Delhi is estimated to be Rs.72 crores based on an average monthly fee of Rs.100/- per connection.

Besides theatrical, cable, video rental and video see through rights, the right holders in cinematographic works (mainly the producers of films) can also sell video right for showing films in commercial places like hotels, ships, video parlours, etc. Our estimation for violation of commercial rights of movies will be confined to  hotel sector only.  It has been found through our survey on the hotel industry that most of the hotels including some 5 star hotels are now connected by the cable operators only. Thus they receive programmes whatever is shown by the cable operators. Some hotels (particularly in the five star categories) have their own dish antenna and also show movies through their own VCR channels. 

The hotels are generally showing on an average 3 Indian films and 3 English films per day. Even if movies are shown through the channels of cable operators and if hotels have taken cable connections from the operators and thereby showing movies to their guests in the hotel rooms (excepting the movies on satellite channels), it would be a violation of copyright law from the view point of commercial right holders of movies.

It was also found that in some of the leading hotels on an average six English and six Hindi movies are shown simultaneously. In the case of two large groups, it was found that they are showing these movies through a contract by leading video/audio company which is supposed to have taken the right. However, this could not be investigated in detail. But from the discussions with the video producers, film producers and their associations it was observed that rights are sold mainly for home video, cable video and satellite channels. They are not much aware if anybody has bought commercial right of showing movies. 

Therefore, it appears that commercial rights market with respect to films is yet to be tapped in India. This makes the estimation of market for commercial rights very difficult. One way of doing this can be looking at the matter from producers' angle i.e. by estimating the revenue the producers would have received if commercial rights were sold. As mentioned earlier in this chapter, during 1996, 683 films were produced in India of which 154 were Telugu films, 138 were Tamil Films and 126 were Hindi films. It is true that commercial rights for all the films could not be exploited as among films produced in Indian languages only Hindi and to some extent south Indian films are in demand from the hotels. Thus, if we assume that only 50% of the total movies produced in a year for which commercial rights could have been sold, then even at a conservative rate of only Rs.2 lakhs per film, the producers would have received about Rs.6.84 crores in 1996. 

From the survey and discussions it was found  that hotels in the category of 3 star and above are violating the law by showing movies without procuring commercial rights. It can be assumed that on an average these hotels are showing 6 movies a day either with the help of the cable operators (through cable operators channels) or through their own VCR channels or both.

As per the statistics available, India during 1996 had about 52,000 hotel rooms in the approved category. About 75% of these rooms belong to 3 star categories and above. This means that about 39,000 rooms belong to this category. Suppose commercial rights for movies would have been sold to certain agencies, which  in turn   would have charged a license fee of say Rs.10 per room per month for using 30 cassettes (Rs.5 per month per connection for 30 cassettes is charged by the cable operators for cable home. It is assumed here that they would charge  double the rate, since these are used for commercial purposes and also the subscribers base is very small), the amount of loss in the commercial rights front would be  about Rs 2.8 crores (Rs.39000 rooms X Rs.10 X 6 cassettes per day X 12 months) in a year (1996).This forms about 41 per cent of the total market for commercial rights as estimated above.

It has been found that home video right is generally sold after six weeks of commercial release of a film to be shown in theatre halls. There are no authentic data on the home video right sold. The producers of the films as well as the buyers of rights i.e. mainly the video producers are tight lipped about the information on this issue. Most of the producers whom we contacted are reluctant even to disclose whether video rights of their films have been sold not to talk about to whom and at what price. Similarly, video producers are not willing to provide us any information regarding the price at which rights are bought. They are also reluctant to provide any information on the  number of cassettes produced and sold per movie. This would have indirectly helped us to estimate the turnover of the video industry since no macro level information/data is available. 

From the survey of the end users, it was found that out of 131 respondents owning VCRs in the six cities, 78 (59.5%) households bought on an average eight video cassettes containing Indian films in 1996. It has also been reported that in India about 25 per cent of the TV households own video cassette player/recorders. There are about 40 million TV households and therefore about 10 million households owning VCP/VCR in the country. Based on this, it was estimated that about 47.6 million (10 X 0.595 X 8) Indian film cassettes were sold during 1996. Therefore, the total market for the video cassette industry in India is estimated to be   Rs. 714 crores based on a rate of Rs.150 per cassette. 

It was reported in the survey that 24 endusers (18.32 per cent of the VCR owners) had bought on an average 8 pirated cassettes in a year out of which 5 cassettes were of Indian films. Based on the above, it has been estimated that about 9.16 million (5 X 18.32% of 10 million)) pirated cassettes belonging to Indian films have been sold in India. The loss to video right holders is, therefore, turns out to be Rs.137.4 crores (9.16 million cassettes x Rs.150) during the year 1996, which is about 19.2 per cent of the total video cassettes market in the country.

To sum up, in India the copyright violations with respect to cinematographic works relate mainly to cable, video and commercial rights. The study revealed that the extent of violations as measured by the trade loss as a percentage of total market size is varying across the segments of the film industry. It is maximum (41%) in case of commercial rights and minimum (8.5%) in the cable, the video lying in between with a violation rate of 19.2 per cent.

The violations of commercial rights of films are wide spread mainly due to the fact that markets for the same have not yet been organised properly in the country. As had been indicated in the chapter, the film producers have not been very keen to exploit the commercial rights. The users, on the other hand, were either ignorant of the need for taking proper authorization for using commercial rights or they had taken advantage of casualness on the part of the rightholders. In fact, the extent of violation in commercial rights as revealed by the present study (41%), is an underestimate. This is because the study was confined to the hotel sector only. The inclusion of other places where commercial rights of films are exploited (e.g. video parlours, ships etc.) would have definitely pushed the violation rate up. 

While nothing could be said in definite terms about the video rights violations due to scanty information available in this segment, the cable piracy figures estimated by the study at 8.5% seems to be on the lower side when compared to the reality. The section of film distributors and theatre hall owners whom the study team met at various stages of the study had mentioned cable piracy as an acute problem for the film industry and pointed out that the losses suffered by them for this are of very high dimensions.  Even if their pronouncements can be termed as exaggerated ones, we feel the reality may be lying some where in between what the affected parties (the film distributors, theatre hall owners etc.) said and what the study revealed. 

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