Abstract:-
This research has explored how the distribution and commissioning service work in the cinema industry, the study also analyzed the hurdles faced by small and independent filmmakers while looking for distribution channels and how the online platforms are eating away the business of production and distribution of cinema. I have also explained how the production units are turning into corporate entities and also the issue related to it and I have furthermore added the importance of legal scrutiny in the cinema industry.
A BRIEF INTRODUCTION
Distribution services in cinema are the most essential part, to get the profit and money-back which was spent on making a particular movie, one should distribute their movie wisely and make available or release it to the public or audiences. The distribution of cinema has almost the same process worldwide.
PROCESS OF DISTRIBUTION AND COMMISSIONING
Once the film is developed it will go through various phases such as the pre-production phase, production phase, post-production phase, and the distribution phase. In the distribution phase which is the main concern here the producers sell the “theatrical rights” of his films to all India distributors or 3rd parties for marketing and releasing of movies to the public.1
The person who does the distribution is called the distributor. A distributor is responsible for the marketing of films, how many copies to be made available. The distribution channel or the distributor is also responsible for to look for prospective buyers such as theaters, which are called exhibitor, they negotiate with the distribution channel on which movies they wish to lease and also on the term of the lease agreement. The agreement mainly focuses on several film screens and profit-sharing which is to be paid by the theaters to the distributor weekly and it will vary from 10%-50% if the movie is released in multiplex and if it is the single screen then 70%-90% share of total earnings would have to be given to the distributor. And this said percentage of shares has to be given after deducting 30% of Entertainment tax from the total revenue, it varies from state to state.
The distribution channel perhaps hires affiliate promoters or sales agents, who will look for prospective buyers for the movies and the distributor, will pay a certain percentage of commission to them accordingly.
“The distributor is the most important link between producers and theaters.”2
The distribution channel is free to choose, the process by which movies are to be shown to the public, either theatrically or through home streaming such as DVD, CD, TV, Video-on-demand, etc.
1. https://www.jagranjosh.com/general-knowledge/how-is-box-office-collection-calculated-1532684559-1
2. https://www.jagranjosh.com/general-knowledge/how-is-box-office-collection-calculated-1532684559-1
CHALLENGES PERTAINING TO DISTRIBUTION
Distributors around the world are still looking for innovative, profitable ones and entertaining films to present to their viewers. One of the interesting features of the cinema is that new talent can be found everywhere consequently, it becomes challenging for the small filmmakers to get a reliable distributor or distribution channel for their movies; as the distributor always heads for profitable and big stars movies which would give more profits/money.
The only way to get a reliable distribution channel is either they have to release their movies over free channels such as YouTube, etc. Or else they have to showcase their talent in film festivals such as “Cannes Film Festival” where they could win top prizes and when that happens, then such small right holders are deluged with distribution channels.
Aniruddha Roy Chowdhury, director of Bengali Films likes Antaheen and 2016’s runway Bollywood hit Pink says “Distribution is an important issue.”3
However, things are changing now production houses are becoming corporatized, they have been moving into the business of distribution, particularly in the overseas markets. Distributors were being marginalized as many producers are releasing films directly. As the cinema is having more corporate players, the distribution game is changing; producers are directly dealing with major Multiplex companies for distribution deals. Thus the main development that was taken place in cinema is that the production units are turning into corporate entities, numerous production units are venturing into the film distribution business. Hence, this will raise the common share of interest amongst them and perceptible amalgamation of the production and distribution businesses.
However, this will perhaps have a negative effect; there may be chances of arising conflict among them. This can be inferred from the following case FICCI-Multiplex Association of India Vs United Producers/Distributors.4
Here, FMAI simultaneously filed a case before the competition commission of India against UPDF & others, where FMAI has alleged that UPDF was demanding an unreasonable sharing ratio of a flat rate of 50% for all weeks and all types of films. It has also been alleged that there was an existence of an anti-competitive agreement amongst the producers/distributors including those who are not the members of UPDF.
3. https://www.business-standard.com/article/companies/regional-films-continue-to-face-distribution-and-piracy-challenges-118031800110_1.html
4. CASE NO. 01 OF 2009
The competition commission established the allegation and imposed the penalty of one lakh on each of the opposite parties in the case.
Moreover, the Internet platform has destroyed the marketing strategy of the elite production and distribution units. A large number of people are accessing the internet and looking for online content, which is cheap and easily accessible for them from the comfort of their home. Online platforms like Netflix, Hotstar, Amazon Prime, YouTube, JioTv, etc., are on-demand nowadays as they are providing quality content, with a cheaper price tag. The latest movies and music can be downloadable easily over the internet with just a click. Although, the online platform has expanded the audience for media but has disrupted the market as well, per contra elite producers and distribution companies are not generating adequate revenue from their work and this becomes a matter of concern for them, as the internet has eliminated the distribution cost to a large extent and digital movies can be transferred from one country to another for pennies.
According to a report by EY India and FICCI, the online platform has drastically distorted the structure of entertainment and revenue from movies in the next two years.5
As estimated, India had over 480 million internet users across the globe. This figure would grow to over 600 million users by 2023, making it a huge market for internet services for the South Asian Country.6
Online platforms are growing at a rapid pace as limited laws are governing these platforms hence, content creators especially independent and small content creators are tirelessly working to create quality content to engage more consumers. They have chosen this platform to showcase their talent, as they can work without much interference of law.
5. https://www.moneycontrol.com/news/trends/entertainment/the-rise-of-ott-players-streaming-platforms-and-the-threat-to-the-box-office-2688531.html
6. https://www.statista.com/statistics/255146/number-of-internet-users-in-india/
IMPORTANCE OF LEGAL INTERFERENCE
When we speak about cinema, the first thing which clicks our mind is that what is the total collection done by the movie, so basically cinema is a business and also has a huge impact on our economy.
According to the Economic Times, the film industry grosses a total revenue of Rs.13800 crore ($2.1 billion) and has the potential to hit $3.7 billion by 2020.7
And such businesses involve an ample number of contracts such as between Artist and Production units, distribution channels and production units, Exhibitor and distribution channels, and so on, etc., and such contracts are governed or protected by the laws of the country.
Moreover, because of the evolution of the internet and the increase of online users drastically, piracy has become a pain for the film industry and it also has a huge effect on our economy.
So to curb such illegal activity like piracy, dubbing, and for the protection of rights of original owners, the interference of law is foremost important. Some of the relevant laws have been discussed here;
· Copyright and Distribution of cinema.
Copyright law is the most important among all the other Intellectual Property Rights in the cinema industry. Cinema is all about artistic creation or expression of their ideas and which automatically subsist rights in the original creator. Per contra, it also gives protection to the rights of producer, rights of the distributor for distribution purpose. The copyright laws are essential to prevent piracy and counterfeiting in the cinema industry.
In case of infringement, the copyright act provides both civil and criminal remedies to the right holder.
“Supreme Court of India has directed to all the subordinate courts in India to decide intellectual property dispute within four months.”8
7. https://economictimes.indiatimes.com/industry/media/entertainment/media/film-industry-in-india-to-hit-3-7-billion-by-2020-says-report/articleshow/60998458.cms?from=mdr
8. Bajaj Auto Limited v. TVS Motor Company Limited, Civil Appeal No. 6309 of 2009 arising out of S.L.P.(C) No. 13933 of 2009
The copyright laws vary from country to country but the regulation relating to the transfer of rights, rules regarding the remuneration of authors and method of dispute resolution, the underlying principles are enshrined in Berne Conventions and relevant international treaties as administered by the World Intellectual Property Organization (WIPO).9
The copyright infringement cases include the unlawful distribution of copies of films by third parties, also involves cases where producer grants the use of copyright work for unlawful distribution to the masses. The infringement also includes a copy of the theme, character, expression, plot, etc., of copyright films.
“Delhi High Court has held that to make a copy of the film does not only mean creating a hard copy by the process of duplication.”10
· Competition Law and Film Distribution
Competition in the film industry, which has long been a concern, as producers, distributors, and exhibitors are always on the verge of horizontal and vertical integration to capture a large market or to create a monopoly in the market and to maximize their profits. Competition is the best method to ensure that consumers will have access to the broadest range of cinema at the best price. However, it becomes unfair when certain producers/distributors tend to create an anti-competitive market, by putting unreasonable restrictions or by restricting other smaller players from doing business. On such incidents, the Competition Law intervenes to protect the integrity or fairness of the markets as well the rights of small players.
9. https://www.wipo.int/edocs/pubdocs/en/copyright/950/wipo_pub_950.pdf
10. Yash Raj Films Pvt Ltd vs Sri Sai Ganesh Prosductions & Ors on 8 July, 2019
CONCLUSION
Distribution and commissioning are the linchpins of the film industry without which a movie cannot be successful no matter how big stars that movie cast. Distribution is marketing to make hefty revenue and earn back the money which was spent while making it. However, in the modern era, the concept of making revenue by distribution channels is quite changing as online platforms are on-demand which is eating away the distribution cost. People are bending towards the online platform as it gives easy and comfortable access with just one click. Although these platforms are good for the small and independent creator as they hardly get the elite distributor or distribution channels previously per contra it is pain for the distribution channels. Moreover, Corporatization is the latest development in the cinema industry which also affects the distribution service. Online piracy, dubbing and counterfeiting are worldwide issues. Although digital platforms are engaging more audience to media, the online content is still in a budding stage across the globe and stringent laws are required to regulate the space. Most importantly Censorship and licensing is the need of time for these companies.
At last, I suggest with modernization the law has to change, there should be more transparency in the distribution lease agreement so that market competition should be fair and provide equal opportunity to grow.
REFRENCE
1. https://www.jagranjosh.com/general-knowledge/how-is-box-office-collection-calculated-1532684559-1
2. https://blog.ipleaders.in/agreements-related-to-film-production/
3. https://en.wikipedia.org/wiki/Film_distributor
4. https://www.intepat.com/blog/copyright/5-copyright-cases-2019-india/
5. https://ksandk.com/competition/4067/
6. https://indiankanoon.org/doc/91660613/
7. https://www.pinsentmasons.com/out-law/guides/distribution-and-exploitation-of-film-and-tv-rights#Commission
8. http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Indian%20Film%20Industry.pdf
Author: Arun Shrestha, Legal Intern at Legal Desire (June, 2020)
Arun Shrestha, Student of LL.B from ICFAI University, Sikkim. His area of interest are IPR, the Cyberlaw, Constitution and Human Rights
