All You Need to Know About the Music Royalty Scam

Javed Akhtar’s complaint against IPRS led to the raid in several top music companies.

Javed Akhtar’s complaint against IPRS led to the raid in the top music companies. 

(Photo: Yogen Shah)

The Indian Performing Rights Society (IPRS) is accused of not paying dues to its member lyricists and song writers. This has prompted a thorough investigation, which in turn, has brought a lot of big names from the music industry that maybe involved in this scam, under the scanner. You might have been reading a lot of news around royalty, copyrights and scams lately. Names like T-Series, Bhushan Kumar, Javed Akhtar, Shubha Mudgal have also been doing the rounds. If you are having trouble processing all this overwhelming information, here is a quick explainer:

What Is Indian Performing Rights Society (IPRS) Phonographic Performance Limited (PPL)?

As a songwriter, composer, or lyricist, you’re owed, what is called a “performance royalty”, every time your music is played on radio stations (terrestrial, satellite, and internet), used on TV shows or commercials, or performed at live venues. Those performance royalties are paid by radio stations, venues, and TV networks to Performing Rights Society (PRS).

Well, in short, the business of IPRS is to issue licences to users of music and collect royalties from them, for and on behalf of its members i.e. the authors, the composers and the publishers of music and distribute this royalty amongst them after deducting its administrative costs. As per the amendment in the Copyright (Amendment) Act, 2012, 50% of the royalty collected by music companies must be given to lyricists and composers.

The PPL is a copyright society for soundtrack recording companies and it also issues licences to the users of sound or music recordings for public performance on behalf of member music companies. It exclusively holds public performance and radio broadcasting rights for over 5 lakh songs in the country.

How Did It All Start?

Javed Akhtar has been fighting a battle to change the way the music industry works in India. It all started with Javed Akhtar getting elected as a member in the Indian Performing Rights Society (IPRS) and that’s when he realised that there was something wrong. A complaint filed by the noted lyricist in 2010 against the non-distribution of royalties by IPRS sparked off the investigation. A lot of writers, singers and composers joined the fight to secure royalty rights for singers and lyricists.

The Quint accessed the complaint letter sent by Javed Akhtar and signed by eminent musicians to Kapil Sibal in 2010 and the FIR filed by Shubha Mudgal which clearly states that despite the amendment in Section 18 and 19 of the Copyright Act, they have not received an equal share of royalty collected by music companies.

“I filed a complaint against IPRS, PPL and their Directors/Officers before the EOW of Delhi Police. Similar complaints were also filed by the Music Composers Association of India and Film Writers Association. Pursuant to filing of the complaint FIR No. 167 of 2016 was registered. Consequently the matter was settled with necessary assurances from IPRS and a quashing petition was jointly filed by IPRS/PPL and other persons arrayed as accused in the FIR and by me before the Hon’ble Delhi High Court. The same is pending disposal and now listed on 20th November, 2017 for consideration.”

In the FIR filed by Shubha Mudgal IPRS is also accused of appointing fake members who are neither authors nor composers. The royalties that should have been paid to the complainants have been “clandestinely and surreptitiously without the consent of complainant’s members channelised to fake members”.

Another complainant in this case was late Ghazal singer Jagjit Singh’s wife, Chitra Singh who had filed a complaint in 2016 for not being paid their share of the royalties and against a misleading advertisement that gave an impression that Jagjit Singh (who passed away in 2011) was going to be performing live.

The main question in this case is - if the royalty money is being collected by IPRS and also not being shared with the artists, where is the money going? Here is where The Enforcement Directorate (ED) comes in.

What Is the Enforcement Directorate and What Role Does It Play?

The Enforcement Directorate (ED) is a law enforcement agency whose primary objective is to check money laundering in India.

On the basis of criminal complaints and police FIRs alleging "gross irregularities" in its affairs, ED team registered a case under the Prevention of Money Laundering Act against the IPRS and the PPL in March 2015. According to reports, ED found serious ‘distribution related lapses’ in the post-revenue collection phase.

What Is the Latest Update?

On November 3, the ED had raided offices of Universal Music Group, T-Series, Saregama, Sony Music and Yashraj Films in several locations, including Mumbai, New Delhi and Kolkata, based on a complaint earlier this year. These music companies have allegedly not paid royalty for songs to their singers and composers and lyricists since 2012. The outstanding amount, the complaint said, ran into several crores.

According to reports, The Enforcement Directorate (ED) said royalty to the tune of Rs. 2,500 crore is under scanner in a money laundering case.

Apart from Bhushan Kumar, the owner of T-Series who was grilled for nine hours Vikram Mehra of the Sa Re Ga Ma music label, was also quizzed by the law enforcement department.

The Quint got in touch with T-Series and this is what Vinod Bhanushali, President - Marketing, Media, Publishing and Music Acquisition, T-Series, had to say:

“As law-abiding citizens, whatever documents were required from us, we have submitted to the ED team. We have not collected any royalties on behalf of composers and lyricists. We have collected royalties only for our sound recordings, which we are legally allowed to as per the copyright law for the film which we have acquired music rights from producers.”

Vinod Bhanushali, President - Marketing, Media, Publishing and Music Acquisition, T-Series

ED has also summoned Aditya Chopra, chairman of Yash Raj Films and Devraj Sanyal, MD-CEO of Universal Music. They are expected to appear for questioning later this week.

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