Global sales of pirate music CDs top 1 billion; one in 3 discs is illegal; pirate sales at us$4.6 billion
Recording industry for first time names top 10 priority countries for Government action
London, 10 July 2003
Global sales of pirate CDs have more than doubled in the last three years and now generate an illegal international business more than US$4.5 billion, according to a new report published by the international recording industry today.
Sales of pirate CDs are estimated to have risen by 14%, exceeding 1 billion units for the first time last year - meaning that one in three of all CDs sold worldwide is a fake - while the total value of the pirate music market, including cassettes, was US$4.6 billion, up 7% on the previous year.
The figures mean that the global pirate music market, at US$4.6 billion, is of greater value than the legitimate music market of every country in the world, except the USA and Japan.
Much of the proceeds from music piracy are funding organized crime syndicates, and the legitimate music industry in several of the worst-hit countries is threatened with collapse, says the report on Commercial Music Piracy 2003. The report, naming a list of top ten priority countries, is published today by IFPI, which represents more than 1500 record companies in over 70 countries.
Enforcement actions stepped up, Government help needed
Industry anti-piracy teams spearheaded by IFPI are helping to limit the damage, but they desperately need more Government backing. Enforcement activity was sharply stepped up last year, with the number of pirate discs seized rising by four-fold to 50 million units. This is still only one in 20 of all the pirate discs sold worldwide.
There were a number of spectacular enforcement successes, including two huge CD seizures in Mexico, the dismantling of a major piracy ring in the Philippines and an action in Luxembourg that netted 1 million CDs, the biggest ever CD seizure in Europe. A total of 71 CD production lines were decommissioned (up from 42 in 2001), with a production capacity of 300 million discs.
The report points to the huge losses piracy causes to investment, economies, cultures and tax revenues and calls for government reforms in 3 key areas: stronger copyright and enforcement rules; regulation of CD plants; and more aggressive prosecution of copyright crimes.
Ten top priority countries named
For the first time IFPI has singled out a global top-ten list of priority countries where the need for anti-piracy action by Governments is most pressing. The top-ten list accounts for different criteria, including a country's pirate sales, the size of its legitimate market, and the trends since 2001.
The priority countries are: Brazil, China, Mexico, Paraguay, Poland, Russia, Spain, Taiwan, Thailand and Ukraine. Top of the list in terms of its piracy rate is China, where more than 90% of all recordings are pirate, worth over US$530 million, despite the country's accession to the World Trade Organisation.
Russia, Brazil and Mexico also stand out among worst-affected markets, with massive sales of pirate music that far exceed their legitimate markets. Taiwan and Thailand have huge disc manufacturing overcapacity, which fuels CD piracy; Spain is Europe's fastest-growing problem territory; Poland's Warsaw Stadium is a massive illegal black market where enforcement remains weak; Paraguay is the gateway for massive pirate imports and exports for South America; Ukraine remains a priority country with poor enforcement and very high levels of domestic piracy, despite the migration of many CD plants across the border to neighbouring Russia.
Outside this top 10 list, many other countries are seeing an increase in either CD-R piracy - small-scale garage or laboratory operations with CD burners stacked in towers - or in manufacturing of discs in CD factories. In 2002, pirate music sales outnumbered legitimate recordings in no fewer than 25 countries.
Wake-up call to Governments
Today's report comes with a three-point call for greater cooperation from governments in the fight against piracy: first, better laws and enforcement rules are needed to protect music; second the massive over-production of discs needs to be regulated by effective Optical Disc Regulations; third, commercial pirates must be aggressively prosecuted and face real deterrent penalties.
Tim Bowen, Chairman BMG UK and Ireland, said: "This report should be a wake-up call to Governments on the massive damage that music piracy is causing to their economies, their cultures and their international reputations. Some of the world's most exciting potential music markets are fighting for survival because of Government inertia in response to rising levels of piracy. This report is a handbook for action - making clear where the most serious problems lie, and what policies need to be adopted in response."
IFPI Chairman and CEO Jay Berman said: "Commercial piracy proliferated in many countries in 2002, and we have named ten priority countries where action is most needed. Our industry invests substantial resources in fighting piracy, but our self-help strategies critically depend on help from Governments. First, we need modern copyright laws and proper enforcement; second, the huge overcapacity of CD plants needs to be reined in by Optical Disc plant regulations; and third, we need deterrence - music piracy is serious organized crime that can only be tackled when courts deliver serious deterrent penalties".
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