Frances Moore's address to the International Anti-Counterfeiting Forum, Moscow
22nd October 2012
Prime minister, distinguished delegates, I am delighted to have the opportunity to speak to you today.
I am chief executive of IFPI, the trade body which represents the recorded music industry worldwide. IFPI is chaired by Plácido Domingo whom you heard from earlier. We have more than 1,400 record company members, large and small, operating in 66 countries. IFPI also has affiliated bodies in 55 countries, and here in Russia we work closely with the National Federation of the Music Industry (NFPF). Our mission is to help our members develop the right environment to develop a thriving, healthy music industry.
Today, our focus is intellectual property. Nothing is more important to creative industries such as ours because intellectual property rights enable us to secure a return on the substantial investment we make in artists and repertoire.
Russia is, of course, well placed to develop a successful legitimate music market. It has an incredibly strong musical heritage. Russian performers are reaching out to a truly global audience. There is amazing diversity - from the rapper Timati, who topped the charts across Europe, to the classical pianist Denis Matsuev. Russian music talent is among the best in the world.
Russia has a highly developed technology infrastructure, too. This country has the largest online population in Europe. Technology giants, such as Mail.ru and Yandex are driving forward the internet economy. And with the development of Skolkovo, there is surely more innovation to come.
What potential does this offer for the music industry and for the Russian economy? I believe Russia has the potential to become one of our industry's top 10 international markets. At the moment, however, it is ranked much lower - number 23. This is not a music market maximising its enormous potential. It is not hard to see why.
There is in Russian a nascent legitimate digital music industry. There are some 15 licensed services, and digital music accounts for just over 25pc of local industry revenues. Players such as Yandex are working with rights holders to develop this legitimate digital market. Yet these services face an enormous hurdle to becoming successful and sustainable businesses. It is impossible for them to compete with unlicensed services that circumvent all the normal costs of a creative business - the investment in artists; the licensing of repertoire; the payments to songwriters and record producers - in short, the costs of being a legitimate business that respects copyright.
Let me emphasise - the music industry in Russia wants partnership with technology providers, in Russia and elsewhere. Internationally, we have proved one of the most successful, pioneering industries of the digital world. In the right environment, the music industry can achieve the same success in Russia, bringing economic value to Russia's technology companies and choice to its consumers. And we shouldn't forget that it is creative content that the consumer is look for when he goes on line or switches on the television. It is creative content, music, games, films, books, not pipes and wires that drives the online economy
But to bring that economic value, there needs to be a change of approach. To make our partnership work needs a new level of commitment to respect intellectual property rights.
In Russia, it is not hard to identify where change needs most urgently to take place.
The most significant unlicensed player in Russia today is vKontakte. The most popular social network in Russia is providing access to countless copyright infringing tracks, highlighting their availability by publishing charts of the most popular songs and making it easy for users to access and download them. It then shrugs off responsibility for this by saying the tracks are uploaded by its members.
We believe vKontakte should take a number of simple steps to bring its business practices in line with other social networking sites, such as Facebook.
There is a key role for government here, too. The law should make it clear that sites such as vKontakte are obliged to take reasonable steps to prevent copyright infringement and that it is illegal for such services to induce or knowingly facilitate infringement. If we strike the right balance, then the Russian online music marketplace can grow exponentially to everyone's benefit, but the key is to ensure that there are incentives for reasonable conduct that will expand legitimate commerce rather than theft.
Government can also provide valuable help in addressing some of the issues rights holders face when bringing infringement cases before the courts. Streamlining the requirements for the provision of evidence would make it more cost efficient for rights holders to bring cases. If the courts could be more open to ordering injunctions that stop illegal businesses trading that could stop them continuing to generate revenue after their infringement has been brought to the authorities' attention.
In addition, making provision for the personal liability of directors of infringing companies would stop individuals acting as serial infringers through a succession of unlicensed services.
These steps will deliver a viable online economy.
Let me close with one example of a country where a transformed legal environment helped deliver these benefits- South Korea. South Korea was once a country notorious for piracy and an under-performing music industry. In 2007, it was ranked 23rd in the world as recorded music market. The South Korean government invested in policies to help culture and creative industries. Included in that were new strong copyright enforcement measures and a comprehensive programme of education on copyright in schools.
South Korea is now the 11th largest market for recorded music one of the most successful exporters of repertoire. Only this month, we have seen the Korean singer PSY have a global hit with his song Gangnam Style. Robust enforcement of intellectual property rights has helped lead to more investment, both in music and in developing legitimate services.
As I said earlier, the presence of senior policymakers at this forum makes me hopeful Russia has decided it will create an environment in which its creative digital economy can thrive. The opportunities are huge and I know Russia is well placed to grasp them.
Thank you for listening.
For further information contact:
Alex Jacob, IFPI London
Tel: +44 (0)20 7878 7935 (Press Office)