Plant settlement in Russia first step in tackling massive pirate CD production

October 22, 2001 - The fight against music piracy in Russia has been boosted by a new anti-piracy settlement agreement between a major Moscow-based CD plant and the international recording industry.

The plant, RMG Company, signed the agreement with the international recording industry's trade organisation IFPI, after it was found to have manufactured over 33,500 pirate CD-ROMs during 2000, featuring MP3 albums by leading artists including Oasis, Björk, UFO, Guano Apes and AC/DC. The discs were distributed within the Russian Federation, and exported to the Ukraine and USA.

RMG has agreed to implement strict new internal procedures to avoid processing pirate orders in the future, and to pay compensation.

The agreement, which is the first of its kind in Russia, reflects IFPI's strategy of tackling the global problem of CD piracy at its manufacturing source, the optical disc plant. Legitimate demand for optical discs is substantially outstripped by the supply from more than 700 plants worldwide. The resulting overcapacity fuels the global pirate market.

Russia has the second largest music pirate market in the world, valued at US$240 million. It also has a massive excess optical disc production capacity, with pirate music CD manufacturing capacity now estimated at 32 million units per year, double the level of 1998. Legitimate music CD demand is no more than ten million units.

Much of this excess capacity is being exported out of Russia, damaging markets in Europe and around the world. Over the past year IFPI has found Russian-made pirate CDs in 19 countries.

Several pirate CD plants are known to have relocated to Russia recently with the capacity to make tens of millions of illegal CDs. Six new CD production lines were also installed in plants between April and August this year.

The increase in optical disc production comes as IFPI is supporting the formation of the first national association for the recording industry in Russia. It is due to launch later this year and its top priorities will be the improvement of copyright laws in the country, effective enforcement procedures and the adoption of a set of comprehensive regulations for optical media replication.

Piracy is hurting Russian and international record companies, and holding back the exciting growth potential of the legitimate Russian music market. The country has a strong music culture with an increasing number of local artists selling outside Russia and attracting international investment. The Russian music market was worth US$197 million in 2000.

Igor Pozhitkov, IFPI Regional Director for Russia and CIS said: "Piracy in Russia is threatening the survival of many local record companies by robbing them of the rewards of their creativity. Only by tackling the massive pirate production of CDs will we be able to develop a thriving legitimate music market. This agreement is an important first step along that road."

For further information please contact:

Fiona Harley, IFPI Communications,
Geoff Taylor, Director of Litigation and Deputy General Counsel, IFPI
tel: +44 (0)20 7878 7900
Igor Pozhitkov, IFPI Regional Director for Russian and CIS, tel: +7095 956 60 57