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News |  29 Mar 2008 12:30 |  By RnMTeam

Piracy costs Indian music industry $325 mn: E&Y

Mumbai: Music is one of the worst hit sectors of the Indian entertainment industry, with 64 per cent of the market estimated to be pirated, according to a new study released by the US India Business Council (USIBC).

The study, done by Ernst & Young and released during the recently concluded Ficci Frames 2008, says that the maximum impact to the music industry in India has been via optical disc piracy and internet piracy. The total loss to the industry is estimated to be at $325 million, of which optical disc piracy takes a sizeable chunk of $255 million. Internet piracy takes its share of $58 million, while cassette piracy is estimated at $12 million.
The study indicates that 2006 marked a shift in the way music was consumed in India. The dominant revenue streams now are non physical ones - mobile downloads, radio and internet. The key business drivers of piracy in the music business are - demand for quick access to music, need for variety and a lack of differential pricing mechanisms. While MP3 format supporting players have been available in the Indian market since 1998, the Indian music companies have only now started adopting MP3 as an alternate standard format for their music, the report notes.

PPR - The loss on account of Public Performance Rights (PPR) in India stems essentially from lack of awareness rather than consumer intent, the study says. This has been further fuelled by the dominance of unorganised retail players across the country, as over 80 per cent of Indian retail is still dominated by unorganised players. The loss on account of PPR cannot be estimated due to - lack of data available on the number and nature of outlets across the country, and the lack of any pricing mechanism defined by the industry for the same, the study notes.

Internet piracy - There are many peer to peer networks and websites that allow illegal download of music. These services are either free or earn revenues through advertising or subscription for their premium services.

Users are increasingly relying on P2P networks over individual websites - with Lime Wire and Bit-Torrent emerging as two of the most popular networks, the study says.

Optical disc piracy - The optical disc business, a low margin one, thrives on volumes and is driven by new regional film music piracy, the study says.

This is further dominated by Hindi films which have a share of 60 per cent of the total music piracy business. These discs are being distributed using the same distribution networks as the legitimate content discs. The music industry has also seen a shift of the distributors to the video business, the study notes.

While the music CDs (AAC format and MP3 format) of each film ranges from $2.5 to $7.5, the pirated discs with MP3 formats that provide music of over 10 films in one disc are made available by the same distributors for $0.75 to $2.5, the study says.

The study suggests that structuring and executing a large scale pro active action plan to fight piracy and help member companies maximise revenues from emerging revenue streams would help the industry.

Overall, the study - The effects of counterfeiting and piracy on India's entertainment industry', shows a loss of Rs 160 billion each year due to piracy. As many as 800,000 direct jobs are also lost as a result of theft and piracy, afflicting India's entertainment industry, it says.