Developing a music industry in Russia - artists and record companies unite in call for anti-piracy offensive

New figures show Russian music piracy at US$311 million, second only to China

Moscow, 5 June 2003

International and Russian record company heads today joined artists and musicians to ask a special government-appointed anti-piracy Commission to step up its fight against the world's biggest illegal music market outside China.

Leaders of the Russian national record industry discussed the issue at a press conference alongside international label heads within IFPI, representing some 1,500 record producers worldwide. They were also joined by celebrated Russian artists including: Ariana, Del'phine, Drugie Pravila and Alexei Kortnev of the band Neschastnyi Sluchai.

The extent of the Russian piracy problem

New figures released at today's Moscow meetings show that the pirate music market in Russia grew by 25% in 2002 and has nearly doubled in value over the last four years. Sales of pirate recordings total US$311 million, compared to a legitimate music market of US$257 million.

This is severely hampering the development of Russia's music market and urgent action is needed to tackle the problem. Two in every three recordings sold is an illegal copy, and the problem is getting worse even in the face of the Government's recent launch of an anti-piracy offensive.

Andrei Sumin, Chairman of the first ever national record industry body, NFPP, and General Director of Sony Music Entertainment Russia, said: "Russian record companies are struggling for survival, artists are losing money they need to build their careers, and the government is losing tens of millions of dollars in tax revenues. It is critical that we do something about it; for the sake of the economy as well as for the millions of young Russian music fans who want the best and most diverse choice in music."

Particularly serious for the international industry, and damaging for Russia's reputation, is the substantial number of pirate CDs that are being exported around Europe and the world. Russian-manufactured pirate CDs have been seized in 24 countries in 2002.

Russia, however, has a promising legitimate music market and a number of world class artists, from pop band t.A.T.u to classical maestro Valery Gergiev. Last year, local Russian producers united with their international counterparts to launch the NFPP, which campaigns to fight piracy and develop the legitimate market.

A special anti-piracy Commission set up last October by Prime Minister Mikhail Kasyanov has been warmly welcomed by the music industry. It has been announced that the Commission will set out a comprehensive anti-piracy action plan in September this year - this will be crucial to the future hopes of Russia's music industry and to future investment in Russia by international companies. Time and effective enforcement are critical.

A call to action

Actions needed now include: laws to regulate Russia's manufacturing CD industry which is massively out of scale with the country's legitimate demand; more efficient enforcement - in Moscow during 2000-2002 only 8% of copyright-related criminal violations were considered by the courts; and anti-piracy reforms that are drawn up with full consultation of the affected industries.

Russian producers say piracy is making it impossible for new acts to build careers, let alone achieve the international success they strive for. The only way artists can survive is by performing live, since they cannot make a living from sales.

Drugie Pravila, a band created six months ago following the nationwide televised talent contest 'POPSTARS all-Russia' (STAN SVEZDOI), said: "After we realised how many people and how much investment is needed to create a band like ours, we started to see piracy differently. For example, the casting competition that we won involved 8,000 participants, all with the dream of becoming artists. Some of the participants are still friends of ours, and we introduced them to our record company WWW Records who financed some demo recordings. But then, the record company couldn't afford to invest in these other acts. If there was less piracy, some of these talented young singers would have had the chance to start a career, as the record company would have reinvested the money from sales of our album. But because the pirates are aggressively offering our album that will never happen for them."

Jay Berman, Chairman and CEO of IFPI, said: "With its wealth of music and entrepreneurial talent, Russian can develop a world-class music industry that will bring success internationally while creating jobs and investment at home. Unfortunately, Russia is instead better known today for its rampant copyright piracy, which affects markets in Russia and elsewhere. We know the Government wants to tackle the problem, we strongly support the work of the new anti-piracy Commission and we look to real results before the end of the year".

RISE IN RUSSIAN MUSIC PIRACY 1999-2002

PIRATE MARKET VALUE TOP FOUR PRIORITY COUNTRIES

Notes to Editors:

For further information or requests for interviews please contact:

London
Adrian Strain or Julie Harari at IFPI on +44 (0)20 7878 7900

Moscow
IFPI Moscow: Igor Pozhitkov on +7 095 956 60 57/58
NFPP: Alexey Ugrinovich on +7 (095) 933 1069