Spotify- The Future of Music Copyright Law in India

05 Apr 2019

April 5,2019:

Spotify, the world’s largest online streaming service launched in India and has raised an important question with regard to the future of the music copyright in India. Its launch was prolonged because it declared its intention to invoke the Copyright Act’s statutory licensing scheme under Section 31D.

The 2012 amendment in Copyright Act has introduced Section 31D, concerned with the broadcasting or performance of a literary or musical and sound recording, which has already been published.

Clause 1 of Section 31D states: “Any broadcasting organization desirous of communicating to the public by way of a broadcast or by way of performance of a literary or musical work and sound recording which has already been published may do so subject to the provisions of this section”.

This can only be done by invoking a compulsory license through and paying royalty rates determined by the Intellectual Property Appellate Board (IPAB).

Spotify invoked the compulsory licensing scheme on February 25 under Section 31D by filing a public notice with the IPAB of its intention to broadcast the works of WCM as an internet broadcaster but excluded the broadcast of sound recordings over which WCM has a right, even though Section 31D allows for this as well.

Section 31D and the Copyright Rules state that the statutory licensing scheme can only be invoked after the determination of royalty rates determined by the IPAB which to have not been updated in the present case.

The main issue which arose when the statutory licensing regime under section 31D cover internet streaming services such as Spotify. On September 5, 2016, the Central Government through the Department of Industrial Policy & Promotion released an ‘Office Memorandum’ regarding the inclusion of ‘Internet Broadcasting Organisations’ under the purview of statutory licensing as per s 31D of the Copyright Act, 1957.

It was observed that Section 31D of the Act dealing with statutory licensing is administered by the Copyright Board. The Central Government has no role in either administering or interpreting it. The court observed that the Central Government has no right to issue any clarification, memorandum, notification or any other such note that ‘interprets’ or ‘clarifies’ Section 31D.

The court further looked at the legislative intent and observed that the legislature never intended to include internet broadcasters within the ambit of this section it was only limited to radio and television broadcasting. The O.M. interpreted Section 2 (ff) of the act which defines ‘communication to the public’ to include internet broadcasting within the ambit of section 31D (1).

The term “communication to the public” is defined as making any work or performance available for being seen or heard or otherwise enjoyed by the public directly or by any means of display or diffusion other than by issuing physical copies of it, whether simultaneously or at places and times chosen individually, regardless of whether any member of the public actually sees, hears or otherwise enjoys the work or performance so made available.

Whereas the term ‘Broadcast’ is narrower and includes two methods of communicating the work to the public. On the plain reading of the definition of “communication to the public” it is clear that “making any work or performance available” is at all times on the choice of the time and place chosen by the owner and not the consumer.

The court cleared the ambiguity and observed that persons running internet music streaming services are not ‘broadcasting organisations’ and will not be covered by section 31D. This would imply, that internet radio would be “communication to the public”. Hence, the services provided by Spotify are not internet radio – the choice of what song to play and when is with the consumer and not the owner.

The decision taken by the court to not include internet music streaming services under the ambit of Section 31D will have an everlasting effect on the music industry and it was earlier believed that the broadcasting agencies are given preference over the music composers.

The validity of Section 31D has been challenged earlier in the case of South Indian Music Companies v. Union of India W.P No. 6604 of 2015, the court in this case upheld the validity of the Section and stated that these provisions under the amended Copyright Act has tried to balance the power of music labels by allowing the broadcasters that obtain the said licenses to have continuity of business by making copyrighted works available to the general public at large.

These provisions have dealt with the monopoly of the music labels by including the grant of a statutory non-voluntary license in the Act. Therefore, the stand taken by the court in the present case should be considered as good law.