Reports

Skewing the Pitch? Implications of expanding Section 31 D of the Copyright Act to Internet Broadcasters and Online Streaming Services

Description: The report critiques a parliamentary committee's recommendation to extend statutory licensing to internet platforms in India, arguing it could undermine creators' rights and reduce the value of musical works due to piracy. It examines the potential impact of broadening Section 31D of the Copyright Act on creators' negotiating power and earnings, especially in the digital music consumption context. The article also explores international licensing reforms as alternatives that protect public interest and creators' income, suggesting a careful reassessment of statutory licensing's extension to digital streaming services.

Attribution: Noyanika Batta. Skewing the Pitch? Implications of expanding Section 31 D of the Copyright Act to internet broadcasters and online streaming services. June 2022, Esya Centre.

Perspectives on the Intersection of the Foreign Exchange Management Act, 1999 and the Indian Crypto-Market

Public information suggests that the Enforcement Directorate, India’s primary economic law enforcement and intelligence agency, has begun inquiring whether cross-border crypto- asset activity would violate the Foreign Exchange Management Act, 1999 (FEMA), India’s capital controls legislation. International financial and monetary organizations such as the International Monetary Fund too have called on nations to amend their capital control laws to meet the challenges raised by the sale and purchase of crypto-assets. Empirical assessment of the matter, however, suggests that the link between crypto-assets and capital control evasion is overstated. In this context, the current paper seeks to assess whether crypto-assets can be accommodated within India’s foreign exchange framework. It also suggests ways to regulate the cross-border flow of crypto-assets without hampering the development of the Web3 economy in India.

Attribution: Meghna Bal and Mohit Chawdhry. Perspectives on the Intersection of the Foreign Exchange Management Act, 1999 and the Indian Crypto-Market. May 2022, Esya Centre and IAMAI.

This report is part of a series published jointly with the Internet and Mobile Association of India (IAMAI) that seeks to inform the public on the different policy dimensions of crypto-assets in India and the implications of regulatory decision-making on Web 3.0, blockchain, crypto-assets, non-fungible tokens and the metaverse. With this series, we aim to create a credible and trusted knowledge repository on the Indian crypto-market..

Decentralized Exchanges: Regulatory Perspectives for India

Decentralized exchanges (DEXs) have emerged as an important component of a broader crypto-business segment known as decentralized finance (DeFi) –  an ecosystem where financial activities are carried out through smart contracts rather than intermediaries. On a decentralized exchange, rather than a centralized intermediary a smart contract or a protocol executes trades on behalf of customers. 

The regulation of decentralized exchanges is necessary from the standpoint of consumer welfare as well as anti-money laundering concerns. These issues are more easily resolved in centralized exchanges, where there is an identifiable or real-world entity dealing with users. Decentralized exchanges on the other hand are designed to offer peer-to-peer trading services, where a smart contract rather than an entity facilitates transactions. 

Understanding how to regulate decentralized exchanges and other DeFi services is important for decision-makers globally. In recent months, avenues have emerged towards the “regulability” of decentralized exchanges. This paper traces these pathways, to establish a starting point for regulators in India to approach the oversight of decentralized exchanges.

Attribution: Meghna Bal. Decentralized Exchanges: Regulatory Perspectives for India. April 2022, Esya Centre.

This report is part of a series published jointly with the Internet and Mobile Association of India (IAMAI) that seeks to inform the public on the different policy dimensions of crypto-assets in India and the implications of regulatory decision-making on Web 3.0, blockchain, crypto-assets, non-fungible tokens and the metaverse. With this series, we aim to create a credible and trusted knowledge repository on the Indian crypto-market.

A Framework to Evaluate Non-Price Factors in Competition Regulation

Description: The report examines how technological advancements have transformed competition in digital markets, focusing on the shift from price to non-price factors like innovation, quality, privacy, and security as key determinants of consumer choice. It highlights the challenges competition authorities face in measuring and evaluating these qualitative factors due to their subjective nature and potential jurisdictional overlaps with sectoral regulators. The report suggests solutions, including an integrated institutional framework and consumer surveys, to better assess non-price competition factors and ensure effective regulation in the rapidly evolving digital economy.

Attribution: Mohit Chawdhry. A Framework to Evaluate Non-Price Factors in Competition Regulation. March 2022, Esya Centre.

Crypto-Assets: What are they and how should they be classified in India?

There are over 12,000 different types of crypto-assets, each providing unique services and functionalities. Despite this abundance, there is limited understanding about what these assets are. Moreover, these assets represent a nascent technology that is rapidly evolving. As such, defining and classifying them for the purpose of regulation presents a continuous challenge.

This paper attempts resolve these ambiguities by explaining what crypto-assets are and highlighting the positive and negative aspects of approaches taken by different institutions and jurisdiction to define and classify them. Further, it suggests a way to classify crypto-assets in India to enhance the ability of authorities to effectively regulate them.   

Attribution: Meghna Bal. Crypto-Assets: What are they and how should they be classified in India? March 2022, Esya Centre and IAMAI.

This report is part of a series published jointly with the Internet and Mobile Association of India (IAMAI) that seeks to inform the public on the different policy dimensions of crypto-assets in India and the implications of regulatory decision-making on Web 3.0, blockchain, crypto-assets, non-fungible tokens and the metaverse. With this series, we aim to create a credible and trusted knowledge repository on the Indian crypto-market.

NFTs: A Technological and Legal Primer

Description: This report explores the rapidly evolving world of Non-fungible Tokens (NFTs), focusing on their technological basis, applications in various industries, and the legal landscape. It details the growth of NFTs, particularly in 2021, and discusses their use in art, gaming, and real estate, emphasizing the role of Indian developers. The primer also examines regulatory challenges, including the classification of NFTs under existing laws, intellectual property concerns, financial implications, and potential for money laundering. It offers recommendations for marketplaces and creators to navigate legal risks and suggests that clear guidance from authorities could foster innovation while protecting consumer interests and ensuring compliance.

Attribution: Mohit Chawdhry and Shivani Jha. NFTs: A Technological and Legal Primer. Issue No. 014, February 2022, Esya Centre.

Determining the Relevant Market for Digital Multi-Sided Platforms

Description: The report highlights the challenges and peculiarities of regulating digital platforms in multi-sided markets, emphasizing the need for competition regulators to adapt traditional antitrust tools for digital economies. It discusses the inadequacy of current market determination methods in capturing the complex dynamics of digital platforms, suggests incorporating platform typology and indirect network effects into analyses, and critiques the inconsistent use of qualitative factors in regulatory decisions. The report concludes with recommendations for legislative amendments and the establishment of guiding principles to better address the multi-faceted nature of digital platforms, urging objective, evidence-based approaches for determining market substitutability.

Attribution: Chawdhry, Mohit. Determining the Relevant Market for Digital Multi-Sided Platforms. Issue No. 013, December 2021, Esya Centre.

First Principles for Competition Regulation in the Digital Economy

Description: The report emphasizes the importance of fostering innovation and maintaining competition in digital markets, similar to traditional markets. It highlights the challenges and peculiarities of digital markets, including scalability and influence on socio-political discourse, prompting global regulatory efforts. It critiques preemptive regulation and advocates for principles balancing oversight with innovation incentives, emphasizing the need for a holistic approach to competition, protection of novel business practices, and safeguarding innovation incentives.

Attribution: Bal, Meghna. First Principles for Competition Regulation in the Digital Economy. Issue No. 012, October 2021. Esya Centre

Securing ICT Supply Chains: An Evidence Based Approach

Description: This report highlights the increasing complexity and security concerns associated with global ICT supply chains. It discusses the impact of repeated cyber-attacks on supply chain vulnerabilities and outlines national security measures adopted by governments, such as the exclusion of Chinese vendors and app bans. The report emphasizes the need for a balanced approach, citing the evidence-based executive order issued by US President Joe Biden as a model for securing ICT supply chains without hindering innovation or trade. The brief concludes with an analysis of how the Indian cybersecurity framework aligns with these principles.

Attribution: Chawdhry, Mohit. Securing ICT Supply Chains: An Evidence Based Approach. Issue No. 011, August 2021, Esya Centre.

The Future of Indian Retail: Stories from the Ground

At the end of 2020, we conducted a study to understand the impact of technology on Indian retail in the backdrop of the COVID-19 pandemic. The culmination of this study has been published in the form of a book titled “The Future of Indian Retail: Stories from the Ground”. 

The study documented the experiences of a diverse group of two dozen proprietors of small and medium enterprises that represent the domestic retail market.  The book showcases these voices from the ground through their experiences of interaction with technology. More specifically, it provides perspective on how digital adoption helped sustain some segments of Indian retail and brought the country closer to the vision of an Aatmanirbhar Bharat, even amidst a crippling public health crisis. 

The real-life stories documented in this publication highlight the entrepreneurial spirit and tenacity with which small entities tackled a fundamental disruption in their business due to the pandemic and the ensuing nationwide lockdown. 

At the same time, the book provides valuable insights into the constraints that small enterprises face while adopting digital solutions. As we move towards the digital transformation of industry, dubbed ‘Industry 4.0’, it will be important for policymakers, business forums and industry associations to work together to overcome these challenges. For example, the improvement of underlying infrastructure and logistics mechanisms will require sustained and targeted investment. Similarly, business owners and employees will require skill and capacity building to effectively integrate digital solution into their operations.

Attribution: Esya Centre. The Future of Indian Retail: Stories from the Ground. New Delhi: Esya Centre, 2021.

Associated Media

The Booming World of India's Social Media Apps

Description: This report examines the evolving landscape of social media apps in India, particularly focusing on the surge of short-video apps. The widespread adoption of affordable smartphones and cheap data has led to a boom in internet users, primarily on mobile phones. Despite progress in bridging the urban-rural digital gap, a significant gender disparity persists. The paper explores the economic implications and societal challenges related to increasing online users, especially women, while emphasizing its unbiased research approach.

Attribution: Bahree, Megha. The Booming World of India’s Social Media Apps. Report 010, July 2021, Esya Centre.

Levelling the Playing Field between Traditional and Digital Businesses

Description: This report explores the impact of over-the-top (OTT) services on various sectors, emphasizing the advantages for consumers and businesses in going digital. It highlights the disruptive growth of internet-based services, especially in India's e-commerce sector, prompting calls for regulatory intervention to ensure a level playing field between digital and traditional businesses. The report argues against applying a legacy regulatory framework to digital services, proposing a two-pronged strategy of deregulation and institutional strengthening to foster fair competition and innovation.

Attribution: Chawdhry, Mohit. Levelling the Playing Field between Traditional and Digital Businesses. Report Issue 009, June 2021, Esya Centre.

India's G20 Presidency: Promoting Trust and Inclusivity in a Digital World

Description: This report discusses the G20's evolution as a key global financial forum and its increasing focus on digital technologies. With India set to lead in 2023, it proposes a digital agenda, emphasizing trust-building and reducing the digital divide. Seven focus areas include digital corridors, infrastructure, MSME capacity building, open data, technical cooperation, regional collaboration, and frameworks for emerging technologies like AI and 5G. The aim is to foster international cooperation and inclusive development.

Attribution: Chawdhry, Mohit and Agarwal, Rohan. India’s G20 Presidency: Promoting Trust and Inclusivity in a Digital World. Report Issue 008, May 2021, Esya Centre.

Digitalising Indian Retail: Capacity Building for a Global Context

E-commerce gained significant attention at the 11th Ministerial Conference in Buenos Aires in 2017, where 71 member states released a Joint Statement affirming their intent to advance negotiations on trade related aspects of e-commerce under the WTO ambit. E-commerce was first recognised in global trade agreements at the Second Ministerial Conference in Geneva in 1998, where member states adopted a Declaration on Global Electronic Commerce and called to establish a Work Programme to examine issues of e-commerce related to trade).

The Work Programme was required to pay specific attention to the economic, financial and development needs of developing countries. India participated in the early rounds of discussion, raising key issues of intellectual property in e-commerce in its communication to the Council for Trade Related Aspects of International Property Rights in 1999. Its representative noted before the General Council the importance of e-commerce, specifically e-retail, for development. But he also stressed the importance of providing adequate policy space for developing states to establish domestic policies to govern e-commerce, and to build capacity among domestic MSMEs. These concerns were echoed by other developing states. As a result of this fundamental disagreement, progress under the Work Programme has been slow in the past two decades.

Recent years have seen a marked shift in the positions of several developing and Less Developed Countries, which are moving now toward a global compact on e-commerce. China, Saudi Arabia, Thailand and Kenya are just a few of the states to have signed and participated in discussions under the Joint Statement Initiative. Another prominent trend is the emergence of regional, interest-based groupings to promote the use of e-commerce for development. For instance the Friends of E-Commerce for Development, a group of developed and developing countries that include Pakistan, Sri Lanka and Australia, are working together to use e-commerce in a manner supportive of local industry and small enterprises. Further, regional trade agreements or RTAs increasingly incorporate clauses related to e-commerce. A recent study found that of 275 RTAs registered with the WTO, 75 contained at least one clause dealing explicitly with e-commerce. Yet India continues to oppose the formalisation of talks on e-commerce under the WTO. In its communication to the General Council prior to MC11, India advocated continuing talks under the existing Work Programme without altering its mandate. Statements from Indian representatives at the WTO show this opposition remains grounded in apprehension, that the entry of global retail brands would significantly hinder the development of domestic retail enterprises.

Failure to develop a more nuanced negotiation strategy at the WTO may have significant consequences for India. It risks being cut off from the preferential market access to be gained from participation in any multilateral or plurilateral agreement. This would hinder the flow of investments into the country, and its integration with the global supply chain. By choosing to completely distance itself from ongoing negotiations, India also loses the opportunity to shape global rules of digital trade. Historically, states that adopted global rules and technical standards have gained a significant first-mover advantage.

To negotiate more effectively at the WTO, India must first build sufficient local capacity, so that domestic products can effectively compete in global markets. It can learn from the experiences of nations such as Malaysia, Singapore and Thailand, which adopted a state-led approach to online retail development, and are able as a result to participate in deliberations under the Joint Initiative.

The focus of this analysis is online retail, a narrower sector than e-commerce. E-retail is concerned primarily with the online sale and purchase of goods, while e-commerce includes a wide range of services such as OTT platforms. A key impediment to India’s participation in global talks on e-commerce is the apprehension that its domestic retail sector will be unable to compete with large global corporations: this can be overcome through capacity building backed by the state, to let domestic retailers harness online retail opportunities, and eventually compete with foreign entities.

This paper attempts to define the broad contours of a specialised development agency that could undertake such capacity building effectively. The next section surveys the existing literature to identify key capacity deficits faced by Indian MSMEs in adopting digital technologies and e-retail. Section 3 outlines India’s approach to regulating e-commerce, contrasting it with the specialised bodies in other developing countries, and identifying certain principles of regulatory design that inform their functioning. Section 4 suggests how these principles could be applied within the Indian context.

Attribution: Mohit Chawdhry, “Digitalising Indian Retail: Capacity Building for a Global Context,” Issue No. 007, February 2021, Esya Centre.

Moderating Social Media in India: User-Generated Content in an Era of Viral False News, Disinformation and Hate Speech

Social media globally, and in India, is widely afflicted by two main problems: hate speech and false news. The reason this is a pressing problem is because eventually both these elements end up hurting democracy. At Esya Centre we have taken an in-depth look at the social media ecosystem in India to identify the problems and come up with potential solutions. While India has multiple bills in the works that aim at tackling some of these issues, the ambit of those bills is very broad and encompasses multiple themes. We’ve kept our paper focused on social media and how to moderate user-generated content.

For this paper, which is not sponsored by any social media company, we spoke with a range of companies, lawyers, researchers, and academicians in the ecosystem. We also studied developments in the U.S. and Europe and adapted from there suggestions that we think will help improve the ecosystem in India without killing business. However, this research does not reflect anyone else’s opinions.

Attribution: Megha Bahree, “Moderating Social Media in India: User-Generated Content in an Era of Viral False News, Disinformation and Hate Speech,” Issue No. 006, January 2021, Esya Centre

Embracing Nonlinearity: The Future of India's Entertainment Industry

India’s media and entertainment industries have always been an important part of our national story. As a young nation born in an era where film and radio were in their infancy, we have seen our triumphs and tribulations reflected in the mass media from the very start. These industries have also become important contributors to Indian economic prosperity. In recognition of their importance, the Union government officially designated audiovisual services as one of 12 ‘champion service sectors’ in 2018.

The sector is witnessing change at breakneck speed – developments in technology, notably the internet and over the top (OTT) content have indelibly changed the creation, distribution and consumption of content. The growing OTT ecosystem offers flexibility to creators and consumers, expands choice, and lowers distribution and search costs. Other developments such as strides in artificial intelligence, virtual reality and augmented reality, are opening up new possibilities in entertainment, creating entirely new categories of products. In its response to these changes, India could potentially propel the sector to new heights and make the country a global leader in entertainment.

To frame a suitable response, it is important to imagine what the future of entertainment will be. How will storytelling, which is at the heart of entertainment, change with developments in technology? While stories take many forms – from the oral epics of ancient bards to slick modern video games – their narration and consumption form a central pillar of human existence. Storytelling has evolved with technology, with the flexibility of oral tales yielding to the standardization of print. Today we are on the cusp of another transformation: from linear storytelling in the printed word, television and film, to a more dynamic and nonlinear mode. Artificial intelligence, virtual reality and augmented reality offer new and immersive ways for people to engage with stories. In the future that emerges from current trends, entertainment will become a more dynamic, non-linear and immersive process, highly personalized to fit consumer desires and needs.

We examine the factors that can make India a dominant force in this landscape. The country has three innate strengths we must leverage. Its cultural heritage is ancient and diverse, and remains underrepresented on the world stage. It is also well suited to the nonlinear entertainment of the future, as it contains many traditions of oral storytelling that yield multiple threads from a common recognisable narrative. Third, India is one of the world’s largest consumers of data, with thriving creative industries. Our creators are prolific in terms of output, but lag behind in commercializing their works to generate greater economic value. To achieve this, India can learn from the experience of countries like South Korea, which has emerged as a global entertainment hub.

Certain transformations are urgently required to achieve this outcome. We need to promote creative freedom, which can be done through industry-led standards, as is the practice in countries around the world. This will require active and continued engagement by the industry, as well as recognition and support from the state. Second, we must focus on building our hardware capabilities. The bundling of content with devices is already ubiquitous. And finally, we need to move to a principles-based approach to regulation, which would ensure consistency of purpose across the expanding range of technologies in the media ecosystem.

Attribution: Shekhar Kapur, Vani Tripathi Tikoo, Akshat Agarwal, and Vivan Sharan, “Embracing Nonlinearity: The Future of India’s Entertainment Industry,” Issue No. 005, November 2020, Esya Centre.

E-Retail, Consumer Demand and the Road to Recovery

I. Demand and E-Retail

The Covid-19 pandemic and ensuing emergency responses across the world are expected to affect firms through supply chain disruptions in the short run and demand declines in the longer run. Given the high share of Micro, Small and Medium Enterprises (MSMEs) as well as the low income of households in India, the country is at risk of a protracted economic downturn, especially given the steady decline in GDP growth.

India needs a two-pronged approach to generate aggregate demand. First, to bring jobs and income back to poorer households, especially for the rural population. Second, to facilitate spending by households who have the willingness and capacity to pay, primarily in and around urban areas. This can be done by facilitating e-retail, which has been a preferred channel during this period. With the element of experience removed from physical shopping, we see a shift in the playing field between online retail and physical stores. E-retail is also more capable of complying with evolving government regulations such as distancing norms, making it both a safe and competitively priced channel to help meet consumer demand.

E-retail regulation in India has a chequered past. For instance, the Government of India’s Draft e-Commerce Policy, which envisions e-retail as a segment within e-commerce, looks to regulate aspects ranging from data and digital infrastructure development to export promotion. It is essential that any future policy on e-commerce should support and incentivise technology adoption and sectoral transitions, such as from offline to e-retail.

II. Restrictions on E-Retail during the Lockdown

A survey of more than 2,000 online sellers conducted between April 27 and May 4 indicates the need for a facilitative policy direction. We find that most firms selling online prefer this channel to offline selling, but faced problems primarily of supply and demand during the lockdown period. A shortage of manpower was another important factor in this period, especially for firms that were previously operating at a larger scale.

Policy also played a role in hindering the operation of e-retail during the lockdown. A great deal of confusion was caused by unclear phrases and terms, for instance the definition of ‘essential goods’ was left unclear.  There was further a degree of inconsistency and differentiation in policy formulation. The adoption of differing standards for online and offline retail during the pandemic, despite the benefits of e-retail such as contactless delivery, is of particular concern.

The lockdown had a substantial impact on retailer supply chains, both online and offline. The initial impact seems to have derived from the lockdown’s sudden nature, and the resulting administrative confusion regarding passes, curfews, and freedom of movement. Businesses operating in multiple states or districts faced a significant challenge in obtaining the necessary permissions for their staff. Later in the lockdown they faced a shortage of labour as several migrant workers had shifted back to their villages or towns.

III. Road to Recovery

Actions by state governments will play a critical role in determining how well small retailers are able to recover. A rapid recovery will require cohesion and collaboration between governments at centre and state. With this in mind a five-step recovery process is suggested in our report.

The first steps are aimed at building trust and confidence in the policy-making process. We suggest that governments at various levels engage with different stakeholders to understand their concerns. Authorities should frame rules on the basis of feedback obtained in such consultation, and the principles of non-discrimination and non-arbitrariness. This will facilitate a level playing field that allows retail market participants to leverage their strengths and explore synergies between the digital and traditional channels.

Authorities must also review the crisis management playbook, including the legislative framework, keeping in mind lessons from the pandemic. A framework governing e-retail, or e-commerce more broadly, can take inspiration from the sectoral development bodies in Malaysia and Singapore, which have enabled local businesses to scale and compete globally.

Attribution: Dr. Megha Patnaik and Mohit Chawdhry. “E-Retail, Consumer Demand and the Road to Recovery,” Report No. 004, September 2020, Esya Centre.

Measuring India’s Creative Economy

1. The aim of this study is to provide the first ever measure of the economic contribution of copyright relevant and related rights-relevant industries in India. The copyright-relevant industries are those defined by the World Intellectual Property Organization (WIPO) as “activities or industries where copyright [and related rights] play an identifiable role”.

2. We adopted the methodology put forward in the WIPO (2015) Guide on surveying the economic contribution of copyright-related industries in India, which intends to maximise comparability with previous studies in other countries. We conduct the study for 2016-2017, which is the latest year where most of the required economic indicators are available at WIPO-defined industry categorisations.

3. Our primary data source is the Annual Survey of Industries (ASI) conducted by the Ministry of Statistics and Program Implementation (MOSPI), which gives comprehensive coverage of the manufacturing sector. We also aggregate company-level data from the Prowess database published by the Centre for Monitoring the Indian Economy and use this to supplement the ASI data for industries outside of manufacturing. We include data from industry studies such as the FICCI-KPMG report and the survey by the media and entertainment industry Skills Council (MESC) to cover industries outside of manufacturing. For the exports and imports figures, we use the trade data published by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), which gives a comprehensive value for all goods traded. We supplement the exports and imports figures with trade data from the World Trade Organisation (WTO) on audio-visual services.

4. For the selection of industries to include, we used the WIPO guide. WIPO distinguishes four categories: Core Copyright Industries, Interdependent Copyright Industries, Partial Copyright Industries and Non-Dedicated Support Industries. In 2016-2017, the Core Copyright Industries accounted for 44.74% of the value added generated by Indian copyright-relevant industries. Similar to other countries, the Core Copyright industries have the highest share of value added across all copyright-related industries.

5. The economic contribution of Indian copyright-relevant industries has been measured using three indicators: the Gross Value Added (the value added to goods and services used in the production process), employment, and the balance of trade (exports minus imports). Data is taken for the most recent year available (2016-2017). Table 1 summarises our results.

Table+1.jpg

6. The Gross Value Added (GVA) of copyright-relevant industries amounted to Rs. 888.89 Billion in 2016-2017, or 0.58% of the Indian Gross Domestic Product (GDP)3. The Central Statistical Office reports GVA by 2-digit industries, to which we cannot apply the WIPO methodology. Our calculations cannot include this data, making our overall calculation for GVA an underestimation. The international average from available WIPO studies from varying years is a contribution of 5.48% by mean and 4.83% by median. The share of GVA of creative industries in overall GDP is visibly less for India than that of other countries. This can be partially attributed to the lack of comprehensive GVA data outside of the formal manufacturing sector, but not entirely, as we describe in the next point.

7. As a benchmark, consider the share of creative economy in the partial and interdependent industries, which mainly come under manufacturing. We can compare this to total manufacturing GVA. The share is 2.97% of total manufacturing GVA, which is still lower than median and mean shares to GDP from other countries, globally as well as across Asia.

8. Employment in India’s copyright-relevant industries is approximately 1.1 million workers. The share to total employment cannot be calculated due to the absence of official employment data for 2016- 2017. However, we calculate the share of partial and interdependent industries to total manufacturing employment in a calculation similar to the one for GVA described above using the ASI manufacturing employment data. This gives a share of 2.72% of copyright-related employment in manufacturing. The average share of national employment in other countries equals 5.4%, once again suggesting that the low share of copyright-related industries can only be partially explained by the lack of data.

9. Employment elasticity is high at 0.87 for the set of copyright-relevant industries. The highest elasticity is for the partial copyright industries due to their high labour intensity.

10. Economic contribution was furthermore measured in terms of the trade balance, which equals exports minus imports. Note that this measure captures only goods traded and excludes copyright-related services. We also add in audio-visual services from the FICCI Frames report for 2016 as they are a large component, but data on other services are not available. India is a net exporter in the Core, Partial and Non-Dedicated Copyright industries, while it is a net importer in the Interdependent Copyright industries. Overall, copyright relevant industries had a deficit of USD 16.4 Billion in 2016-2017, while overall India ran a trade deficit. Note that using unweighted data, we would get a trade surplus of USD 34 billion. This divergence is due to several methodological concerns including the absence of trade data on services, the prescribed method for selection of weights, and the detail of HS product code selected.

11. Various methodological and data issues had to be resolved to finalise this study. There are minimal assumptions on industry mappings from the WIPO guide to India’s industry classification, which can often require assumptions for other countries. We make assumptions on assigning shares to narrow industries which overlap with each other, or report their data in an aggregated fashion. We also make simplifying assumptions on the weights or copyright factors, in the absence of firm survey and interview data. For the trade calculations, there is no reliable mapping between industry and product codes, so we matched these by description. Finally, we supplement core datasets with aggregate figures from company reports and industry reports for groups of narrow industries, in the absence of comprehensive data at the narrow industry level that the WIPO methodology requires.

12. For a richer estimate of the size of the copyright economy in India, our recommendation is for government agencies to produce an advanced version of this study. Access to data on GVA at the narrow industry level from the CSO will be necessary to estimating the contribution of copyrightrelated activities accurately. Trade data on services is crucial to capture the copyright economy for India. Estimates of employment from household and small enterprise surveys can be used to capture the informal sector.

13. Several qualitative aspects of the creative economy can also be included for better understanding of the creative economy. Periodic documentation of the copyright-relevant sectors can help understand trends. This study can be considered the first step towards measuring India’s creative economy.

14. The WIPO methodology is more amenable to developed country settings where almost all economic activity takes place in the formal sector. The informal economy remains out of scope in settings such as India. We recommend WIPO consider this in future versions of its guide.

Attribution: Dr. Megha Patnaik. “Measuring India’s Creative Economy,” Report No. 003, May 2020, Esya Centre.

Trends in Copyright Infringement and Enforcement in India

The World Intellectual Property Organisation describes copyright (or author’s right) as the rights that creators have over their literary or artistic works. Works covered by copyright range from books, music, paintings, sculpture, and films to computer programmes, databases, advertisements, maps, and technical drawings. In the first report in the series, we explored the changing role of IP rights globally, shaped by advancements in the digital era. We discussed how copyright has been elevated from being an ‘economic vehicle’ to ‘a communications instrument relevant to cultural policy.’ And how, therefore, copyright laws influence free expression, shape innovations in the digital cultural space, govern information flows, regulate the production and exchange of digital cultural products, and shape social relations of communication. Copyright law gives control to authors and subsequent owners. Thus, writers, artists, musicians, performers, software programmers, publishers, students, researchers, librarians, teachers, readers, movie-goers, and music fans amongst others, exist in a web of cultural and economic relations subject to copyright law. Copyright impacts the information and communication markets as well as culture around the world, its infringement can be seen as both a moral and an economic violation. With the proliferation of the Internet and internet devices, infringement has become seamless and at scale. This report explores the contours of digital copyright piracy and how it affects all kinds of expressions of ideas.

Industry Growth and Piracy

The debate over piracy, and whether it promotes or harms cultural consumption, remains unsettled. The rise of the digital medium for consuming content has added to industry growth but has also aided digital piracy. For instance, online streaming has emerged as the biggest contributor to music consumption. In india, as of December 2018, the value of the audio ott market was USD 250 million, and music consumption per week stood at 21.5 Hours versus a global average of 17.8 Hours..

Using music as a proxy for the content industries would demonstrate the potential of the digital market. Piracy has affected other digital media as well. Illegal streaming reportedly accounted for:

Annotation 2020-07-30 165230.png

The Indian Context

The Indian creative industry (largely comprising the media and entertainment industry) is poised to be worth USD 31 billion by 20209 and is expected to create 1.3 million jobs by 2022.10 Although the Indian Government has identified the audiovisual sector as a ‘champion services sector’, much remains to be done to protect and promote investment and innovation in India’s creative economy. The growth of an innovative content ecosystem depends on a clear understanding of the market, the legislative and enforcement framework, and piracy’s technological underpinnings.

The first critical step is identifying why piracy takes place, and what makes India a particularly challenging market in this regard. A recent meta-study of the existing literature found that a predisposition towards digital piracy is influenced by several aspects: personality factors (self-control), personal or psychological factors (neutralisation techniques, attitudes and beliefs), and social and cultural factors (social learning, collectivistic/ individualistic factors). Other determinants included legislation, and efforts by industry, the judiciary, and policymakers to curb digital piracy.

The drivers of digital piracy in India specifically remain unaddressed in recent academic literature. There is no recent and reliable data on the total size or scope of the cultural economy in India, nor the scale and nature of copyright infringement. For instance, while WIPO has calculated the revenue, employment and net exports generated by the creative industries in a number of countries, such a study is yet to be conducted for India.

India presents a number of challenges in combating online piracy for multiple reasons: lack of uniform enforcement mechanisms, the fragmentation of supply chains in cultural industries, emerging business models, the rapid development of the OTT space requiring increased technological investments in media encryption and piracy monitoring, an overburdened judicial system lacking in specialised IP courts, and the absence of a widespread understanding of copyright, among other factors. Content owners thus need to additionally invest in media encryption and piracy monitoring services. Local industry continues to be dominated by promoters and family owned companies, therefore, governance structures tend to be informal, making industry organisation and policy advocacy more difficult.

Centralised and uniform enforcement strategies are difficult to implement in India. ‘Law and order’ is a state subject under the Seventh Schedule to the Constitution, so enforcement initiatives that rely on the police are organised at the state level rather than through any centralised agency with national jurisdiction, making it difficult for enforcement strategies to be implemented uniformly throughout.

In conversations with industry experts we discovered some unconventional factors (beyond pricing and availability) that shape the piracy industry in India. For instance, the factor of time or the ‘windowing’ period is critical to controlling piracy. The less time it takes for a theatrical release to find its way to a legal, more accessible digital medium like OTT, the less users’ predisposition to consume pirated content. In this context, a recent report mentioned that due to the threat of digital piracy across and between windows has prompted many TV copyright owners to shorten delays between releases to different segments of the market. In certain cases where there is a high risk of widespread piracy (e.g. the Game of Thrones series), some content suppliers have moved to a day-and-date approach in which material is released simultaneously across differing outlets and platforms worldwide.

Indeed, the use of OTT platforms has emerged as a strong anti-piracy measure, and with local and international content now available at lower prices on various OTT services, the piracy market in India is bound to undergo certain changes, given the variety of content (international and regional) offered by several legal online content platforms at affordable price points.

Method

This report combines desk-based analysis with semistructured interviews and discussions with practitioners and academic experts. It focuses primarily on the media and entertainment industries, given the availability of previously conducted research and data. It is also rooted in current and future trends, a review of global literature, and specific case studies. In its working paper format, the report was valuably informed by a focus group discussion among experts.

Attribution: Dr. Megha Patnaik, Shohini Sengupta and Aishwarya Giridhar. “Trends in Copyright Infringement and Enforcement in India,” Report No. 002, December 2019, Esya Centre.

Associated Videos:

Contemporary Culture and IP: Establishing the Conceptual Framework

i. Context and Relevance

Successful digital transformation has been explained as “a caterpillar turning into a butterfly. It’s still the same organism, but it now has superpowers.” This is perhaps the most apt way to contextualise the ongoing digital transformations in the formal and natural sciences, social sciences, art, and culture, enabled by new technologies.

Across the world, technological innovations are constantly creating new knowledge, improving access to information, and helping cultures evolve, with digital traces marking every human interaction in the digital space. Coupled with this is the fact that in the last five years, more than one billion people have become new Internet users, and digital connectivity has gone from being confined to economically prosperous parts of the globe, to reaching a majority of the world’s population.

In India, the digital transformation in the past few decades has upended the cultural space in a dramatic manner, engendering the need for new legal, economic, and technological responses. This churn has resulted in businesses investing in cultures of collaboration, in capturing volumes of data and enabling collaborative data sharing. It has also added to a more vibrant and mature ecosystem of customers and partners, and made agility and innovation the key goals of a new ‘digital culture’. In fact, new research suggests that by the year 2021, digital transformation will contribute an estimated US$154 billion to India’s GDP, and increase the growth rate by one percent annually. Interestingly, responses to an evolving digital culture are themselves in a state of flux, mandating reinvention and reimagination of existing frameworks of law, economics, and technology.

The evolution of culture has always been a product of constant borrowing and diffusion. Therefore, cultural systems are not discrete but a continuum, with cultural boundaries being fluid, and constantly shifting. As such, much of the predominant legal discourse reflects assumptions about cultural systems that are no longer accepted in disciplines such as anthropology and folklore. For instance, much of the IP discourse around the world is still struggling to deal with the legal concepts around cultural evolutions that have emerged as a result of creolisation. This is because conclusive legal discourses are unable to form around cultural products that are not “finished” products. Therefore, cultural boundaries blur and disappear, with native cultural entities combining, recombining, re-emerging, and creating cultural expressions that defy strict IP or legal concepts.

Annotation 2020-07-29 174338.png

The challenges of a new digital environment make it imperative for scholarship in India to develop around new legal, economic, and technological frameworks. These frameworks must evolve to bring the fruits of the digital cultural space to people, while fostering innovation, competition, diversity and choice. Figure 1 gives a visual representation of the interactions between culture and IP.

Further, the role of cultural evolution and the correspondent development of IP doctrine and practice have long been shaped by evolutionary perspectives on human society. Much of the international IP frameworks that developed in the 19th century reflected the national systems of the countries at the negotiating table, and the values that they sought to advance or considered important. For instance, since this was the age of the industrial revolution, cultural production contained in local knowledge like folk music was treated as entirely appropriable knowledge, but not as valid systems in and of themselves. Therefore, local knowledge was not thought to be comparable to the products of industrialization. This is reflected in the way IP systems developed in many countries. For instance, although IP protection in many countries was extended to Geographical Indications, no protection was otherwise given to other forms of local knowledge, reflecting prevailing views concerning the devolution of folklore. Further, international IP frameworks also reflected the role of commercial interests of the countries that were deciding the international legal order.

Conversely, today, the identification of cultural evolution and its elements is fundamental to not just IP, but also other attendant policy choices and questions of economic and business value. This is especially since the operation of cultural resources as valuable assets cannot be denied in the contemporary context, given the business models of creative industries, even though there is still a gap between the development in culture and IP. The gap between culture and IP exists in India as well. For instance, because of copyright law being written with pre-digital technology in mind, artefacts of these assumptions continue in the law regardless of attempts to modernize it. In the EU, there have been significant debates over the new Copyright Directive, the ostensible purpose of which is to modernise copyright rules for the digital age across the region, including increased protections of digital works. In India, similar advances to modernise the Copyright Act, 1957 (Copyright Act) with a view to resolving the debates over increased protection of digital works, intermediary liabilities, and discourses over different approaches to dealing with infringements in the digital space are still evolving.

Further, there is a vacuum in multi-disciplinary research on culture and IP in developing countries as a whole. Most existing research has been focussed on the countries that are part of the Organisation for Economic Cooperation and Development or the global ‘North’. As a result, there is little contextual development in the global south, and particularly in India, over how digital culture and IP interact with each other.

As such, this series will focus on the peculiarities of the Indian digital cultural ecosystem, primarily centred on three relevant stakeholders – users, businesses, and the Government, as detailed in Section 3. We believe that research focussed on the digital culture and IP in India will help all stakeholders in understanding and exploiting digital transformation more efficaciously. More importantly, understanding varying incentives can help stakeholders such as creators, producers, distributors, publishers, users, and policymakers identify common values, which in turn can define future standards in the digital space. To this extent, this series on ‘Contemporary Culture and IP’ will attempt to fill gaps in scholarship and raise foundational questions on law, economics, and policy issues of the future. This foundational paper aims to lay the foundations for future research and undertakes two interrelated tasks: (i) developing the taxonomy and foundational ideas for the series; and (ii) building the foundational frameworks on law and economics for the series to explore in depth, prospectively.

ii. Understanding what Contemporary Culture means for India

a. Understanding digital culture, and who shapes digital culture

Contemporary culture is rooted in the development of digital technologies, making these technologies both powerful catalysts, and sometimes the focal points of cultural change. The local digital ecosystem in India has burgeoned, leading to more virtualisation of group networks and social identities, and convergence of text and audio-visual media. The evolution of technology is in itself a reflexive process that responds to the evolving digital ecosystem consisting of creators, publishers, distributors, innovators, consumers and other stakeholders. While technology has always allowed stakeholders to respond to changes, the digital ecosystem has allowed the response time to decrease, such that stakeholders can now give their feedback almost immediately. For example, digital platforms and social media platforms like Twitter and Facebook now allow citizens to communicate directly with politicians and Government institutions, as well as offering policymakers new channels to listen to and respond to the wider electorate.

Thus, technological and cultural evolution have become interdependent to the point where correlations between the two, and the boundaries between people and technological artefacts have become difficult to establish. Therefore, in the context of India, this series explores the local meaning and impact of digital culture on the three most prominent stakeholders - the users, the businesses, and the Government; and the relationship between new technologies and cultural innovation, and the latent possibilities for such stakeholders to gain from the digital cultural space. Section 3 will chart the reasons for selecting these three stakeholders, and their relationship with each other.

Therefore, a primary focus in this series will be to view these different incentives from an evolving lens, in an attempt to understand why incentives vary, the role of each stakeholder, and the future opportunities and challenges. The series will also explore new roles, and responsibilities for new stakeholders such as intermediary platforms.

b. Identifying relevant digital cultural norms and contexts for defining digital culture

The role of IP rights has gained significance in the digital era, shaping both cultural life, and the conditions of communication and information sharing. For instance, in the case of copyright, scholars have argued that it is not merely an “economic vehicle, but a communications instrument relevant to cultural policy.” Copyright laws of a particular country influence democratic expressions of free speech, shaping innovations in the digital cultural space, governing flows of information in the economy, regulating the production and exchange of digital cultural products like books, music, art, and movies; and shaping social relations of communication. Copyright law gives powers of control to authors and subsequent owners, and regulates the production and exchange of meaning and information. Thus, writers, artists, musicians, performers, software programmers, publishers, students, researchers, librarians, teachers, readers, movie-goers, and music fans among others, exist in a web of cultural relations subject to copyright law. However, in the digital world, copyright laws have also generated a new public idea of communication, participation and production, which favours a collaborative model of shared and cumulative cultural dialogue over a proprietary model of cultural production.

The development of digital cultural norms along with IP values play a critical role in defining each other’s scope. A key part of this series, therefore, will be to explore the relationship between digital cultural norms and IP, particularly in areas where there is significant public debate, and a lack of clear policy. For example, the series will explore public and cultural space occupied by intangible goods that currently lack IP protection, that is, ‘cultural commons’, particularly in the Indian context.

Today, due to commercial-technologies permeating citizens’ lives, including the way we access and consume information, we are far more familiar with the technological contexts of our culture. This familiarity with technology, for instance, in the use of smartphones and television screens, allows us to navigate evolving cultural norms even though the digital cultural space itself is constantly changing due to this participation. However, since the digital cultural space only started evolving a few decades ago, stakeholders cannot rely on any long-standing norms and rules for digital interactions of different kinds. Therefore, stakeholders will now have to develop new cultural norms and commonly shared values, collectively developing rules, depending on the role they play, and their incentives. An example where stakeholders have come together to do so effectively has been in addressing the issue of child pornography on the Internet, by developing a universally accepted norm of restricting child pornography in a digital cultural context.

The varying perspectives on the evolution of contemporary culture brings us to the understanding that there are two schools of thought in this regard - one that argues that the existing cultures might find themselves essentially recreated in digital form as more and more life experiences play out in digital spaces; and the other that argues that dominant digital culture emerging now is a separate culture unto itself. For this series, we understand the term ‘digital culture’ to mean an uncertain combination of both of these perspectives. We will attempt to capture a multi-dimensional, and context-specific understanding of digital culture in this series.

For the purpose of illustration, we present some of the relevant contexts in which digital culture can be understood:

a. The cultural influence of new media environments and the digitisation process that has aided in the development of new digital cultures in media;

b. The development of common values, agreements, and interactions of different stakeholders in the digital society, and the ways in which people, businesses and the Government communicate with each other;

c. The importance of using IP systems creatively and effectively to increase access, innovation and value generation in the digital ecosystem;

d. The values of building a cooperative shared economy, to own and govern the Internet differently in the digital age, to improve income distribution in cultural supply chains, and address the legacy of an informal workforce.

Attribution: Shohini Sengupta and Aishwarya Giridhar.“Contemporary Culture and IP: Establishing the Conceptual Framework,” Report No. 001, March 2019, Esya Centre.