The T-Series Story: 

A Murder
In July 1997, some of the leading personalities from the
Indian music industry gathered for a meeting at a five-star
hotel in Chennai. Among those attending were
representatives from music companies like Venus and Tips
Industries (Tips) and the owner of Super Cassettes
Industries, Gulshan Kumar (Gulshan). The meeting had
been called to persuade Gulshan to co-operate with the
other music companies.

One of the representatives pleaded with Gulshan, "You've

ruined the market. No matter how hard we try to sell, you
undercut us. We owe huge amounts to lenders. For God's
sake, ease up on your business so that we can carry on
with ours." To this, Gulshan calmly replied, "I won't do it
any more." Though the others did not really believe him,
the meeting ended on a peaceful note.

But Gulshan could not continue run his music empire for
much longer. A few days after this meeting, he was shot
dead, allegedly by the Mumbai underworld.
Two of Indian film industry's prominent names - music director Nadeem Saifi
(Nadeem) and a promoter of Tips, Ramesh Taurani (Taurani) - were arrested for
conspiring to kill Gulshan.1 The case, covered extensively in the national media, was
still being fought in the courts in November 2001, with Nadeem hiding in UK and
Taurani out on bail.

Gulshan's death brought to the attention of the nation the story of a man who had
allegedly built an empire on music piracy and plagiarism. Super Cassettes' 'T-
Series' had completely changed the way the Indian music industry functioned,
allegedly by successfully exploiting the loopholes in India's anti-piracy regulations.
Background Note

The Indian Music Industry

The Rs 12.50 billion2 Indian music industry has long been considered to be synonymous with
Indian film music. However, due to the promotional effects of satellite music television and the
entry of global music companies in the 1990s, non-film genres, such as international music,
Indi-pop and regional music have also become popular.

Traditional music such as classical and devotional music and ghazals have also received
renewed attention. The rapid increase in the number of corporate music retailing outlets, the
increasing penetration of Compact Discs (CDs), the emergence of distribution channels such as
the Internet and the ever-growing base of 60 million cassette players and four million CD
players have facilitated the trend.

During 1990-2000, the industry grew by 18%, selling 210 million music cassettes and 13 million
CDs in 2000. The industry was dominated by cassettes - the penetration level of CDs in India
was only 5-6%, against 70% in the developed markets. However, CD sales have been
consistently growing at a faster pace than music cassette sales.

Music is an extremely important feature of Indian films. (See Box). While a good soundtrack is
vital for getting a movie pre-release publicity, a good movie aids the music sales after the
release. Hindi film music accounts for 70% of the film industry's revenues.

T-Series was the overall market leader, followed by Saregama3, which had the
largest number of titles from old Hindi songs. The other players, in order of their
position in the market were: Tips, Sony, Universal, Venus, BMG Crescendo,
Magnasound and Times Music. In addition, there were many small players, both at
the regional and national level.
Understanding the Movie/Music Connection

Producers usually sign music directors for a movie in the planning stages itself.
Sometimes the music directors are brought in after the story is completed. The
producers then tie up with a music company. The marketing of a movie starts
usually a month before the release of the music of the film, through print ads,
posters, billboards and signboards. Once the music is released, trailers are shown
on various television channels. The promotion costs are either borne completely
by the music company or shared by the company and the producer. The overseas
distributor is responsible for promoting the movie in the foreign markets. The
promotion is sometimes continued even after the movie's release, depending on
its performance.

Acquiring the rights to the music of a new Hindi film is costly, with the acquisition
costs ranging between Rs 20-120 million. With the market being price sensitive,
margins were low and the break-even volumes were high. There was
considerable risk as predicting the success of a soundtrack was extremely
difficult. The initial promotion costs for the music companies ranged from Rs 10-
20 million. Besides this mode of paying an up-front amount, another model
followed was the Minimum Guarantee plus royalty model, wherein the company
paid a smaller amount to the producer and committed to paying royalty only if
the income from the album exceeded a certain amount.
Source: ICMR

Music Piracy
The term piracy is generally used to describe the deliberate infringement of
copyright on a commercial scale. It is illegal and criminal in nature. Music piracy
basically refers to three kinds of activities:
• Counterfeiting - The copying of the sound as well as artwork, trademark, label
and packaging of the original recording, with an aim to mislead the consumer into
thinking that they are buying the genuine product.
• Pirate Recording - The unauthorized duplication of music from legitimate
recordings for commercial gain. Pirated CDs or music cassettes may be
compilations or combination of hit titles of different music companies. Unlike a
counterfeit product, the packing and presentation of a pirate copy is usually not a
replica of the legitimate commercial release.
• Bootlegging - The recording, duplication and sale of a live concert or broadcast
without the permission of the artiste or the music company which has the recording
rights for the artistes performances.
Those involved in music piracy range from owners of big
recording facilities to small shops with a single music
system, which is used to record songs that the customers
ask for.

According to the International Federation of the

Phonographic Industry (IFPI), a worldwide trade
association for the music industry that identifies and
attempts to solve problems of piracy, sales of pirate
recordings were $ 2.1 billion in 1995. This represented
unauthorized sales of 954 million music cassettes, 84
million CDs and 4 million LPs - indicating that one in every
five recordings sold worldwide was a pirated copy.

India was the world's third largest pirate market in volume

and sixth in value. The Indian music industry lost millions
of rupees each year to the pirates. Of the nearly 580
million cassettes sold in the year 1997, 175 million were
illegally manufactured and sold by pirates. The pirates
evade payment of royalty, excise duty and sales tax and
also they do not have to incur the promotion and publicity
costs. Piracy levels were as high as 90 % in the early
1980s, coming down to 65% in the 1990s and to 40% in
2000.

T-Series & Music Piracy

Gulshan's father Chandrabhan and his family moved to Delhi from West Punjab in
1947. The family members began selling fruit on the roads and within a few years,
earned enough money to establish a small fruit juice shop. Chandrabhan later
started selling pre-recorded music by opening a record shop. In the early 1970s,
Gulshan began looking after the music business and named it Super Cassettes.

By 2000, T-Series had become a $ 90 million group with a presence in the

Consumer Electronics (color television, fans), CDs (12 million CDs per annum),
Audio/Video Magnetic tapes and cassettes (186 million cassettes per annum) and
mineral water businesses. The company had rights to over 2000 video and 18,000
audio titles, comprising of nearly 24,000 hours of music software. T-Series had a
technical collaboration with Hyundai of Japan for its color television venture.
This meteoric rise of T-Series was termed by analysts 4 as 'a story of avarice, greed
and cunning and the clash of two mafias - one represented by Gulshan and the
other by those whom he damaged.'

In the 1970s, the Indian music industry was dominated by GCI and Polydor (later
named Music India Ltd.- MIL), which sold only expensive LP records through a few
record shops. These companies did not set up facilities to manufacture cassettes on
a large scale. Since cassette players were not very common in the country at that
time, GCI and Polydor were happy offering cassettes in small numbers at very high
prices.

In the late 1970s, cassette players flooded the country, many of them being
Japanese 'two-in-ones' (radio and cassette player) brought in large numbers by
workers returning from the Gulf states. In 1978, with the Indian government
liberalizing the import and export trade, new kinds of luxury consumer goods
appeared in the market. These goods were popular with the rapidly growing middle
class population. Cassette players (and consequently, cassettes) were one such
new item that quickly became popular in the country.
Compared to the LP records, cassettes were incredibly
cheap to produce and reproduce and could be easily
distributed and transported. Gradually, a large number of
outfits began setting up illegal copying operations. Most
copyright violators chose old Hindi film songs from the GCI
catalog. All that was required to run a copying outfit were
two cassette players and a supply of tape, spools and
cases.

Since the bootleggers paid no royalties and no excise and

used cheap cassettes, they were able to sell their products
at half of GCI's prices. By the mid 1980s, cassettes
reproduced in this fashion accounted for a significant
portion of the music sold in India. A major part of this
piracy industry was reportedly owned and operated by T-
Series.

In the late 1970s and early 1980s, audio cassette

production was defined as a small-scale industry (SSI).
Thus, Gulshan was able to take advantage of the subsidies,
loans and all the other incentives accruing to the SSIs. The
only capital expense the company had was the cost of the
cassette - Rs 7 - and the cost of duplicating.
This cassette was retailed at about Rs 25. On the other hand, GCI and MIL
cassettes retailed for Rs 36-45, as the companies had to pay, in addition to
royalties, an excise duty of 15 % on every cassette. As T-Series did not pay any
excise duty, the entire 15% benefit was passed on to the customer. Gulshan also
kept his dealers/retailers as happy as possible - if a T-Series cassette was found to
be defective, it was instantly replaced. Super Cassettes never became a member of
the IMI5, and therefore, was under no obligation to follow the organization's
guidelines. The company quickly emerged as the biggest competitor to GCI, which
even came close to winding up its operations.
By the mid 1980s, T-Series had reportedly stopped the pirated recording business and 'shifted'
completely to the legitimate businesses. However, controversies continued to dog the
company, with Gulshan coming out with the idea of 'cover versions.' Cover versions were
albums that used the musical compositions as well as the lyrics of original well-known Hindi film
soundtracks. Fresh recordings were made using the same compositions and lyrics, but with a
different orchestra and singers, from the ones used in the original.

These recordings were then sold in the same market in which the original soundtrack albums
were sold, in most cases with the same title. While some parties took permission before making
the recording, others merely sent notices, as required by Rule 21 of the Copyright Rules Act
1958, along with a cheque for a paltry sum towards royalty for the literary and musical works.
Cover versions were considered to be legal as long as the makers had acquired permission from
the original music companies. The Supreme Court had passed a directive that cover versions
done after a period of three years from the release of the original music score were legal.

Initially, Gulshan's cover versions featured only old Hindi film songs. Gulshan got unknown
singers to sing these as their rates were low and Gulshan was able to make good margins on the
overall deal. Soon, he began making cover versions of new movies as well. Though the cassettes
always made it clear in small print that these were not the original recordings, the consumers
were not always savvy enough to read the small print.

During the early 1990s, Gulshan released a number of albums featuring religious
songs. These were fairly successful. He even acted in, sang for and directed a few
of the videos of such songs. These were run on the state-owned television channel
Doordarshan. T-Series also began producing Hindi films. One of the company's first
ventures, the musical 'Aashiqui,' was a huge success. This was followed by many
more movies, a majority of which flopped.
However, the music of these movies was a success in
almost all the cases. The success of 'Bewafa Sanam,' one
of the many mediocre T-Series movies starring Gulshan's
actor-brother Kishen Kumar, took the whole industry by
surprise. Gulshan even invented the concept of the 'music
bank' where tunes were stored till a movie or a record was
identified to 'fit' them into.

Things were going on rather smoothly - till Gulshan

released a cover version of what was reportedly one of
India's biggest blockbuster movie, 'Hum Aapke Hain Kaun'
in 1997, violating the three-year waiting period stipulated
by the Supreme Court.

This time around, the attack on GCI's profits was too

strong to be ignored and the company filed a suit against
T-Series. In the same year, a few music industry players
approached the former finance minister V P Singh,
demanding that Gulshan be punished for violating
copyright laws and pirating music. However, V P Singh
reportedly6 dismissed them saying, "Don't come to me with
your hard luck stories.
You've no marketing strategies so you haven't discovered the marketplace. Gulshan
has. And you want me to punish him for his entrepreneurial ability?" As the 'Hum
Aapke Hain Kaun' case went to the courts, Gulshan was murdered. With Gulshan's
death began a period of uncertainty for the T-Series group. The music company
was not doing very well as Gulshan had stopped buying music rights from
outside7 and the T-Series' films had failed.

The other businesses were all relatively new and not yet well established. There
were reports of infighting in the family regarding the control of the various
businesses. Saregama, Tips and Venus, who had emerged as the leading players in
the Hindi film music segment, had also ventured into film production. Though
Saregama's movies did not do well, quite a few Venus and Tips movies were huge
successes.
The December 1998 Delhi High Court ruling in the 'Hum Aapke Hain Kaun' case,
which put an end to the cover version recordings, was the biggest blow to T-Series.
The High Court order said that the makers of version recordings relied upon a
special provision of the Indian Copyright Act [S 52(1)(j)]. Taking advantage of this
provision, the pirates claimed that copyright owners of the compositions and lyrics
were only entitled to a statutory license fee. They also said that once the owners
received the license fee, they had to allow the fee payers to make sound
recordings.

The Delhi High Court held that there was no provision for such automatic licensing
and the sound recordings could be made by third parties only after they had
obtained permission from the copyright owners. The Court held that under the
Copyright Act, assignments and licenses could only be made in writing. They had to
be signed by the assignor/licensee. As GCI had categorically refused to grant a
license/assignment in favor of T-Series and had also returned the cheque for the
royalty amount sent by T-Series, it was able to win the case.
The Unsolved Problem

Though GCI had won this case against T-Series, the problem of music piracy still plagued the
industry. The music companies were handicapped by the legal definition of copyright violation
wherein piracy was not a cognizable offence. The companies had to prove that cassettes were
being pirated before getting a warrant of arrest. According to certain reports, music pirates
were always tipped off about police raids in advance.
The nexus between the film/music industry and the Dubai/Mumbai underworld was another
problem. The mafia controlled a large portion of the Mumbai music piracy business. This nexus
was so strong that after an IMI raid in the early 1990s in Mumbai, IMI officers were beaten up
and its Mumbai office was destroyed. After this, all the markets in that area were closed for 15
days in protest against the raid.

According to IMI estimates, almost 95% of the distributors and dealers were involved in piracy
and on an average, only 40% of the stock was genuine. Analysts claimed that except for giving
leads to the police and initiating raids on pirated music vendors, even the music companies had
done precious little to curb music piracy.

The problems associated with the distribution network in the music business also substantially
helped the pirates. Market observers claimed that around 50 distributors had an absolute
control on the music industry's distribution network.

Distribution was the most profitable part of the music business. The average cost of a cassette
for the distributors was Rs 19. The selling price ranged from Rs 38 (large retailers) to Rs 44
(small retailers) for a cassette. The retailers added their own margins to the price. The price for
the customer thus ranged between Rs 50 and 60.

The problem was compounded by the fact that in the case of film music, if supplies were not
made available immediately, the demand shifted either to pirated cassettes or to some other
album that was easily available. Thus, it was imperative for the music companies to sell in bulk
to the distributors.

The price for the customer thus ranged between Rs 50 and 60. The problem was compounded
by the fact that in the case of film music, if supplies were not made available immediately, the
demand shifted either to pirated cassettes or to some other album that was easily available.
Thus, it was imperative for the music companies to sell in bulk to the distributors.

The companies realized that they had a lot to gain by bypassing this network. The
logical solution, though time consuming and costly, was to set up their own music
stores. The biggest initiative in this direction had come from Saregama, whose
owners, the RPG group had successfully established the Music World chain of
music retailing outlets all over the country. The emergence of organized music
retailing outfits like Planet M and Internet based stores such as fabmart.com was
expected to help the companies improve their performance.
Gulshan - Pirate or Messiah?
Indian film music lovers have always regarded the decades prior to the 1980s as
the 'golden era' of Hindi film music. During the 1980s, there was blatant and sub-
standard copying of international music. In the late 1980s, videocassettes became
extremely popular among India's upper class and upper middle-class families.
As these people began watching the latest films in their
homes, video piracy became rampant. Now it were the
lower classes that could not afford to buy color television
sets and video players or recorders, that went to the
theatres. Hence, films were made to cater to their tastes.
These films were invariably medicore and the music was of
very low quality.

T-Series was given credit for bringing the music industry

out of this decline. Many critics praised Gulshan's unerring
instinct in picking up saleable music. Some of the films for
which Gulshan procured the music rights in the early 1980s
went on to become huge successes. Almost all these
movies featured melodious music, bringing back the
sounds of the pre-1980s era.
Gulshan's supporters held that till he came along, GCI and
MIL had been virtually looting the consumer by charging
absurdly high prices for music cassettes. Gulshan had done
the customers a great service by making cheaper
cassettes, and retailing them through small shops all over
the country, thus making cassettes affordable and easily
available even to the common man.
T-Series even took back unsold cassettes (to re-use the shells as well as tapes) so
that these small retailers would not suffer losses. Gulshan was also lauded for
promoting fresh talent8 through the cover versions. (Interestingly enough, after
Gulshan's death, the prices of audiocassettes increased in the late 1990s.) Noted
media personality Pritish Nandy said, "He may have made some money through
cover versions and piracy.

But what is more important is that he benefited listeners, expanded the market and
created a galaxy of new stars. He broke, in that sense, the existing monopolies and
drove hard and fiercely a sloth, decadent, exploitative market to make it boom.
But, like all swashbuckling pioneers, Gulshan Kumar got a bad name for doing it
first."
The fact remains that while the music pirates made huge profits for themselves,
they inadvertently ended up benefiting the music industry as well. Since their entry
in the 1970s, the industry had more than quadrupled in size. Not surprising
therefore, that some say the Indian music industry 'owes its growth to the pirates.'