June 8, 2010

Dawood’s Terror Chest - Piracy Business


IT ALL started in Indore, when the city’s top movie hall released Avatar. Within 24 hours 20 copies of high-quality pirated CDs of the James Cameron 3D blockbuster had made their way to Mumbai and could be had all across the western Indian metropolis. Alarmed, the Motion Pictures Distribution Association (MPDA), the Indian arm of the Motion Pictures Association of America (MPAA), along with top Bollywood producers, announced that they had launched India’s first major drive to combat movie piracy.

All concerned are deeply anxious. According to Rand Corporation the Indian entertainment industry loses close to Rs 164 crore ($35 million) every year to various forms of piracy. The US-based non-profit research agency that tackles challenges facing the public and private sectors adds that 20 percent of pirated goods infringe the copyrights of international titles.

A section of the industry led by Moser Baer CEO Harish Dayani, however, believes the figure is nearly Rs 400 crore. “And yet the industry is not reacting. Indians are happy watching a pirated film because it comes at a low price,” Dayani laments.

MOST WORRYING of all is substantial evidence that D-Company — the underworld outfit controlled by Dawood Ibrahim — commands almost 85 percent of the $35 million racket, and uses the proceeds to fund terror activities in India.

“There are enough leads to establish the fact that D-Company has substantially scaled down its extortion racket because producers in India rarely go to private financers — having unlimited access to corporate funds from companies like Reliance Big Entertainment and UTV,” former top cop Aftab Khan, founder of the Mumbai Police’s anti-terrorist squad (ATS) told TEHELKA. The breakthrough came last year with the arrest of one Jatender Kumar, alias Rinku, who ran a pan-Indian syndicate on behalf of D-Company. The small town operation close to Delhi created high-quality master CDs and sent these to duplication units nationwide.

So what’s the way out? Khan says counter-piracy staff is being stationed at movie halls in Mumbai and some other cities to nab the local mafia who bribe cinema hall officials to record the movie on the very first day of its release. Later they make the master CDs for piracy. Khan quoted a 2009 Rand Corporation report on how Dawood, by degrees, had established a near-total monopoly to control the master copies of pirated Bollywood and Hollywood films.

Dawood — named a global terrorist by Washington in 2003 because of his proximity to Osama Bin Laden — has vertically integrated his operations throughout the Indian film and piracy industry. “If not checked, the business could double to $70 million by 2012,” asserts Khan, adding: “D-Company provided protection to two large camcorder syndicates based in New Delhi which, in turn, distributed the pirated master copies to wholesalers in Kolkata.” The Rand report says China, Brazil, Malaysia, India, Pakistan and Russia are among the countries where film piracy is rampant.

Veteran filmmaker Mahesh Bhatt calls piracy a parallel industry that can even finance films. “The pirates have enough greenbacks to run their own show. Yet Indian film producers rarely meet the government, and even when they do they fail to use the issue as a lobbying lever.”

Others see it as a mere law and order issue, or one that results from rivalry between filmmakers, multiplex owners and home video makers. The fact that it is a thriving illegal industry with a strong underground underpinning is blithely ignored. “There is no concerted effort to check the camcorder menace. Once a movie is sold, the production company feels that all of the rest is the distributors’ headache. You can’t solve the crisis with such a mindset,” says Taran Adarsh, a senior movie analyst and television show host. He is supported by Hiren Gada, Senior Director, Shemaroo Entertainment, who feels the issue should not get lost among a host of individuals talking loudly and not taking a decision.”

Last March, however, Moser Baer, UTV Motion Pictures, MPA and Reliance Entertainment contributed Rs 50 lakh each to form a counter-piracy coalition for mounting raids and conducting consumer education campaigns. As part of one such drive, the coalition launched Escape From Terror Byte, an educational book on film piracy, in three languages in Mumbai. Now there are chances that the Human Resources Development Ministry could soon include it in school syllabi countrywide. “Union HRD Minister Kapil Sibal has been very supportive of the move,” says Dayani, but he feels that the representative group should have been more broadbased.

Market analysts say the trouble in India is lack of coordination. For instance, barring the four, no one — multiplex chains like INOX, PVR or single-screen chains like UFO Moviez — joined the consortium. Also, though Indian copyright laws do have provisions to nail the offenders, their implementation is woefully lax,” says Rajiv Dalal, MD, MPDA.

Experts say there was a time when movies in India — both domestic and international — made decent business of 40 to 45 percent. But now, due to piracy they are opening with just 8-12 percent. Indeed it gets to be so rampant that companies are now reshaping their strategies and flooding the market with low-cost DVDs and VCDs. But Moser Baer, which did the same three years ago, reworked its strategy after the approach failed. This only suggests that basepriced products cannot by themselves rein in the great Indian piracy bazaar. For that to happen, the counter-piracy gang would need to grow a lot bigger.