Future issues for the protection of phonogram producers

Speech by Allen N. Dixon, General Counsel and Executive Director, IFPI
JSO 4th Asia-Pacific Copyright and Neighbouring Rights Seminar, Tokyo, 8 March 2000

The recording industry is probably facing the biggest changes and challenges of all of the copyright-based industries at the present time. 'Digital technology revolutionises access to every kind of music,' said Richard Parsons of Time Warner after the recent announcement of its proposed merger with AOL. 'The music industry will be the greatest beneficiary of the digital revolution,' was how Gerald Levin, the company's chairman put it.

The future, as they say, is now. The question is what rights owners require at present in order to prepare for this future, and to be as much as possible its masters rather than its victims. In determining what is needed now, however, we need some common-sense understanding of how the future is unfolding, what the dominant aspects of the foreseeable future are for the recording industry and how producers' rights need to be adjusted and protected in light of these trends.

There are four broad areas in which the recording industry is changing. First, the underlying business models of the recording industry are evolving rapidly. Second, the industry increasingly is looking to technical protection measures to ensure that producers realise the value of recorded music in the digital, interactive environment. Third, new and more refined licensing models are inevitable. And fourth, the problem of piracy is raising new challenges, both through the mass production of counterfeit CDs and through unauthorised on-line distribution. It is not possible to examine the full diversity of the changes that digital technologies and networking environments are bringing to the recording industry. But it is useful to note briefly where such effects with long-term implications are being felt, and then turn to the question of the appropriate legal response.

Copyright and related rights protections will continue to provide the economic basis for the recording industry as it migrates to the Information Society. These rights serve not only as an engine for the development of sound recordings and other creative content-by protecting, rewarding and spurring investment in such creations-but also for the development of the Information Society itself. While telecommunications and information technologies are intriguing in their own right, public acceptance and demand for advanced communications and information processing technology is driven by content-what consumers can do, learn and enjoy when they go on-line.

I. Changes in Business Models

a. Industry developments

New disc formats. On the production side, recorded music still is manufactured and distributed largely on mass-produced physical media, although this is now done on digital optical media such as compact discs (CDs) rather than vinyl discs. Sometime during the year 2000, we should start to see disc production in the so-called 'DVD-Audio' format, a new format similar to the DVD-Video discs now used by the film industry. Also underway is the Super Audio CD (SACD) format. All of these discs will hold a much greater amount of data than CDs, and therefore can support a greater number of recorded tracks, and/or a much higher quality of sound. Several record companies already are re-mastering their catalogue recordings in the new "5.1 format," which supports five surrounding speakers plus one bass 'woofer' speaker for a sound that industry experts say is amazing.
New compression and broadcasting formats. Similarly, new compression formats are evolving in the recording industry. The most well known is probably the "MP3" compression format, which refers to Layer 3 of the MPEG-1 or MPEG-2 compression standards of the Moving Picture Experts Group. This allows digital data to be compressed to 1/12 to 1/24 of its original size, depending on the sound quality desired. This technology permits digitally recorded music to be stored in new and much smaller memory units, such in computer files or in a dedicated MP3 player. Even more sophisticated compression standards are under development at the MPEG group and elsewhere. See http://drogo.cselt.stet.it/mpeg/. Similarly, as broadcasting signals migrate from analogue to digital formats, new standards are evolving for digital audio broadcasting and digital video broadcasting.
Customised CDs. At the retail level, record stores have started to install kiosks that allow consumers to pick their desired tracks and have a CD made containing their own particular compilation, with the record producer's authorisation. Larry Kenswil, president of Universal Music Group's eLabs, predicted recently that these kinds of kiosks are going to 'save' the recording industry's retail shops. In ten years' time, he predicts, more than 25% of music sales will be generated by in-store kiosks.
On-line CD sales. Also springing up are retailers that allow users to order physical CDs through the Internet, and have them delivered by mail. Some of these are owned by the record companies themselves (see http://www.cdnow.com and http://www.bol.com), some are operated by traditional retail outlets (e.g. http://www.fnac.fr), and some are operated by new on-line retailers (e.g. http://www.amazon.com).
On-line track downloads. Legitimate download sites are developing slowly but surely on the Internet. These allow a consumer to select individual tracks of recorded music, pay for them by credit card or other payment mechanism, and download the tracks to his or her personal computer or portable music device for permanent use. This is something that has obvious appeal to individual recording artists or small production companies-it is a very inexpensive way to get into the recording business. Some new 'dot.com' companies are signing up new musical talent and making this their only business. See http://www.emusic.com. And major producers are experimenting with various types of downloads as well. E.g. http://www.musicmaker.com.
Interactive music services. A host of new interactive services are being developed, and traditional forms of radio and television broadcasting are under increasing pressure from new and competing communications services that offer streaming audio by a variety of means. As an initial matter, traditional broadcasters themselves are increasingly looking to the Internet as a place to expand their own businesses; some have already started 'simulcasting'-converting the output of their broadcast stations to a format that can be communicated over the Internet. New 'webcasters' are springing up that are not connected with a traditional broadcaster at all, but that offer their own custom programming only over the Internet. Multi-channel subscription, near on-demand and on-demand transmission services are evolving in Europe, North America and Asia.
On-line talent search. There was a time when the recording industry involved finding and nurturing new musical artists and groups through local 'A&R' (artist and repertoire) scouts, and recording, marketing and distributing records made of vinyl. Today, the industry already is starting to search for talent on-line. The development of Internet sites where an artist can upload his or her songs, have them reviewed by industry professionals and the general public, and be considered for a recording contract, are already a reality. See, e.g., http://www.farmclub.com.

In the simplest terms, every one of these changes to the recording industry's business models is all about increasing consumer choice and control. A substantial number of new options are arising to satisfy consumers' demand for music: through new physical carriers; through new distribution outlets; or through on-line or other telecommunication services. These also are increasing consumer control over how music is enjoyed: passively or with the power to copy, adapt, transform or otherwise creatively interact with the composition, production or recording artist.

b. Copyright challenges

The challenges for copyright in this fast changing industry are clear. Copyright must continue to provide rights holders the ability to determine whether and how their works are exploited. Traditional concepts such as the right of public communication must evolve into exclusive rights to authorise or prohibit the 'making available' of works and phonograms. And traditional exceptions that allowed, for example, individuals to make private copies of cassette tapes using relatively poor technology, must be re-examined and tightened in light of recent technological developments.

The international community analysed these issues carefully in the late 1990s, and developed the WIPO Performances and Phonograms Treaty (WPPT), and its analogue for authors, the WIPO Copyright Treaty (WCT), in order to provide a roadmap for the needed adaptations. Prompt ratification and implementation of these treaties undoubtedly is the single most important task for governments that want to make their copyright regimes suitable for the age of electronic commerce.

1. Right to authorise any form of reproduction and distribution

The reproduction right. The new treaties recognise that the act of reproduction of protected works and phonograms will remain of utmost importance as various copyright-based industries evolve. The reproduction right is important both in terms of underpinning licensing of electronic reproduction rights and in combatting unauthorised dissemination of works and phonograms in information networks.

The WIPO Copyright Treaty affirmed the comprehensive Berne Convention right protecting 'any manner or form' of reproduction. (WCT, Agreed Statement Concerning Article 1(4).) This was read into the Performances and Phonograms Treaty, which explicitly protects 'direct and indirect reproductions,' as provided by the Rome Convention. An important understanding was reached on both treaties at the diplomatic conference, to the effect that the right of reproduction applies fully in the digital environment, in particular to the 'use of performances and phonograms in digital form. It is understood that the storage of a protected performance or phonogram in digital form in an electronic medium constitutes a reproduction.' (WPPT, Agreed Statement Concerning Articles 7, 11 and 16; WCT, Agreed Statement Concerning Article 1(4).)

The diplomatic conference rejected proposals to limit the concept of reproduction to 'permanent' or 'commercially incidental' copying. Indeed, protecting all manner of reproductions, including temporary electronic copies as well as permanent tangible copies, is now more important than ever. Many of the most fundamental commercial transactions in information networks will involve authorised temporary copying to computer memory for the use of remotely stored works and phonograms, downloads to portable physical media, and creation of commercial sites on networks. In many economically valuable uses of works, the only copyright-cognisable act will be the making of temporary reproductions that disappear when use of the work ends.

Distribution and rental rights. The WPPT and the WCT recognise for the first time in an international treaty a general right to authorise or prohibit public distribution of copies, as well as confirming the existing right of certain rights holders (including phonogram producers) to control unauthorised commercial rental (regardless of the ownership of particular copies). (WCT, Articles 6, 7; WPPT, Articles 12, 13.)

These remain core requirements to prevent the unauthorised exploitation of protected works and phonograms recorded on physical media. As electronic services continue to evolve, classic definitions of 'distribution to the public,' 'publication', 'importation' will become less and less tied to the offering of physical copies, but can be extended to acts of delivering copies electronically.

2. Rights of broadcasting, public communication, and 'making available'

Broadcasting and communication to the public. The WPPT provisions on broadcasting and communication to the public generally track the Rome Convention. (WPPT, Article 15.) That is, producers and performers are granted only a right to a single remuneration for broadcasting and communication to the public that is shared as agreed or, in the absence of agreement, as determined by law. As in the Rome Convention, this right is subject to reservation in whole or in part.

While this result on broadcasting and communication to the public was disappointing to phonogram producers, the treaty points to potentially greater exclusive rights over broadcasting and communication to the public. First, the treaty does not preclude the granting of greater rights by the parties. Second, and more importantly, the diplomatic conference recognised that the broadcasting and public communication provision 'does not represent a complete resolution of the level of rights of broadcasting and communication to the public that should be enjoyed by performers and phonogram producers in the digital age. Delegations were unable to achieve consensus on differing proposals for aspects of exclusivity to be provided in certain circumstances or for rights to be provided without the possibility of reservations, and have therefore left the issue to future resolution.' (WPPT, Agreed Statement Concerning Article 15.)

Further neighbouring-rights controls over broadcasting and public communications activities are needed, particularly as the activities of traditional broadcasters migrate towards digital services that emulate or substitute for 'interactive' services protected by the producer's exclusive 'making available right.' Public communication is no longer simply a secondary use, merely a way to promote sales of physical discs as was thought in the past, but is becoming a primary means of exploiting sound recordings. As new forms of electronic exploitation of music develop, reassessment and enhancement of producers' rights beyond the levels reflected in the Rome Convention and the WPPT is absolutely necessary.

'Making available' right. One of the most significant developments of the WPPT was the exclusive right provided to phonogram producers to authorise the 'making available' of their phonograms in so-called 'on demand' transmission systems. This was adopted without significant opposition, and addresses a basic element of electronic commerce. Producers anticipate that interactive systems make it possible to deliver copies or performances of phonograms from remote databases. The making available of phonograms through transmission services by which the consumer is able to determine the contents, timing and place of the transmissions they receive is immensely attractive to authors, performers, producers and consumers.

Ambiguities over whether these sorts of transactions fall within the meaning of 'communication to the public' under Berne echoed in the Rome Convention. The WIPO Copyright Treaty resolved that problem by writing into the concept of 'communication to the public' acts of making works available to the public interactively. (WCT, Article 8.) The approach of the Performances and Phonograms Treaty was somewhat different. Although the acts involved are transmissions, the treaty creates a separate exclusive 'making available' right that, at the national level, can be implemented as an aspect of the communication or distribution right. (WPPT, Article 14.)

For our purposes, it is enough to underscore the value of this right for exploiting musical recordings on information networks, in attacking the unauthorised making available of phonograms on the Internet, and thereby in promoting the development of new business models in the recording industry. We note the very good implementation of this 'making available' right in Japan's recent copyright-law amendments, whereby virtually any communications emanating from or through a computer server fall within the 'making transmittable' right, subject to the exclusive control of phonogram producers and other rights holders.

3. Exceptions

Unlike the Rome Convention, which contains an overly general exception for 'private use,' the WPPT applies the test of Article 13 of TRIPs to all exceptions and limitations to rights accorded under the treaty. (WPPT, Article 16.) This means that derogations from treaty rights are permissible only insofar as they are not expressly precluded and insofar as they do not conflict with a normal exploitation of the performance or phonogram or otherwise prejudice the legitimate interests of right holders.

This will be a very important principle as the new business models of the recording industry and other copyright-based industries come into place. For example, private copying is no longer simply a matter of 'time shifting' or making an anthology from one's own collections. Wrongly applied, an exception for private copying could allow a single lawful copy of a phonogram to be replicated by every single national citizen or user of the Internet-which not only would conflict with but simply destroy all exploitation of a phonogram. One thing is abundantly clear: however long private copying has been viewed as an incidental activity, it has become a basic commercial transaction in electronic commerce.

This is not to say that all copyright exceptions need be abolished. As has traditionally been the case, carefully crafted exceptions can be fashioned at a national level, if necessary, to cover such issues as the liability of telecommunications service providers who have no actual or constructive knowledge of third-party infringements. This has been done successfully in the US and the EU, for example, not by creating blanket carve-outs from copyright protection, but by maintaining the supremacy of a broad reproduction right while defining specific exceptions that carefully define the persons, activities and conditions with respect to which damages will or will not attach for contributory liability. (US Digital Millennium Copyright Act, http://lcweb.loc.gov/copyright/legislation/hr2281.pdf; Proposed EU Directive on Electronic Commerce, http://europa.eu.int/eur-lex/en/com/dat/1999/en_599PC0427. html.)

II. Reliance on technical protections

a. Industry developments

Given the increasing availability of recorded music and the myriad of different uses and exploitation means made possible through new computer and telecommunications technology, rights holders like phonogram producers are increasingly looking to technological protection measures to provide a practical adjunct to, and a practical means of enforcing, the copyright and related rights guaranteed by legislation.

The most recent major development in this area was the CSS encryption technology applied to DVD-Video discs. In the recording industry, we are also seeking to create a secure trading environment through the use of technological measures, while at the same time ensuring that fans can enjoy music in as many reasonable ways as possible. In this spirit, the recording industry has worked with other industries to create the Secure Digital Music Initiative (SDMI).

SDMI includes a wide range of companies, large and small, from the consumer electronics, computer, security and recording industries. They meet regularly to develop specifications for music systems. The first priority was to address the exciting developments in portable players that have been made possible by new semiconductor technologies coupled with music compression. Anyone who has used these devices will understand their appeal as lightweight, lower power and reasonable sound-quality units. However, they also encourage piracy, as they can play illegal music files that have been downloaded from the Internet.

A consensus between the SDMI participants emerged. The recording companies agreed that they would not seek technical protections for certain tracks already released for use on MP3 players. The hardware and computer companies agreed that they would protect music offered over the Internet. All agreed that music taken from a CD or other source should have some minor limits to prevent the more blatant forms of piracy.

This does not mean that record companies will tolerate pirated music on the Internet-indeed we regularly close down sites where the owners ignore or do not understand that posting music without permission is illegal. Nor does it mean that they will not develop future technologies to prevent illegal copying of music over the Internet. Indeed, SDMI is working on a "screen" to prevent such music from being played on an SDMI player. This may well involve watermarking music files.

Initiatives are also underway in Europe, North America and Asia to devise technical systems to monitor digital utilisation of works and phonograms, to detect infringements, and to identify works, phonograms and different rights holders. Essential to the effective utilisation of information technology in licensing are internationally compatible systems of identification, 'tattooing' of protected materials, and electronic copyright management and control systems negotiated among hardware, content and telecommunication service providers.

b. Copyright challenges

These types of technological measures themselves need protection from hacking, however. As quickly as new encryption technologies are developed, someone tries to break them. The recent hack of the DVD encryption system is illustrative. A Norwegian computer programmer created a program that unlocked the CSS encryption system, and made the program available to all 200 million Internet users simultaneously.

While the Norwegian hacker was detained, and preliminary injunctions have been issued in two court cases against Web site operators offering this hacking program (see http://www.mpaa.org/press), the potential damage of this type of activity is obvious. Unauthorised circumvention activities and circumvention devices weaken the robustness and integrity of any technical measure developed; neutralises their value in discouraging unauthorised copying, distribution and use of a work or phonogram; and ruins the substantial investments that both the hardware and content industries are putting into developing and manufacturing technical measures and consumer devices.

1. Protection of technical measures

The WPPT and WCT treaties obligate states to provide adequate legal protection and effective remedies against the circumvention of technical measures used to restrict the unauthorised exercise of rights under the treaties. (WCT, Article 11; WPPT, Article 18.) These provisions and their proper implementation are vital to electronic commerce. A producer making a 'jukebox' service available must be able to control unauthorised access and copying, or protect different service options (e.g., to proscribe copying at one level and price of service and allow it at another, to allow limited browsing, or to regulate other matters such as serial copying and sound quality associated with different services).

Several countries have already developed legislation implementing this treaty provision. Some trends and lessons have emerged:

First, the act of circumvention must be controlled. This is plain from the language of the treaties themselves and makes sense, given that the act of circumvention is the starting place for all damage that can be done to the technologies and rights holders.

Second, the import, manufacture, distribution and other offering to the public of a range of circumvention devices (including the offering to the public of pass words and access codes) must be prohibited. Devices that are 'designed or adapted' to circumvent technical protections, or that are 'primarily designed or adapted' to circumvent, must be illegal. Devices that have 'only limited commercially significant uses other than to circumvent' should be treated as if they had been designed for that purpose. And no one should be permitted to promote, advertise or otherwise make known the circumventing capability of any device or service.

Third, it should not matter whether a device that meets these tests is a simple, single-purpose 'black box' or is built into multi-purpose equipment or systems. Therefore, any component, part, or other means that has been designed or adapted to circumvent, or meets any of the other tests of an illicit device, should also be prohibited.

Fourth, access-control as well as copy-control measures must be protected. Today's technology largely relies on access control-a consumer cannot use a DVD disc unless the CSS program provides access through decryption, for example. This design discourages reproduction, distribution and use of illegal copies of these works. The next generation of protections will include copy-control technologies that, for example, will sense whether the disc that is being copied or the transmission that is coming down the line has been authorised for further copying. So long as a technical measure is designed to protect copyright and related rights, both civil and criminal remedies should punish its circumvention.

Fifth, exceptions to these protections against hacking, if any, must be narrow and very carefully defined. It must be borne in mind that a hack for one purpose amounts to a hack for all purposes, legal and illegal, and that circumvention devices do not presently discriminate between legal and illegal purposes. Exceptions beyond those absolutely required make technical protections simply useless.

2. Protection of rights management information

The WPPT and WCT treaties also protect 'rights management information', such as the ISRC (International Standard Recording Code). (WCT, Article 12; WPPT, Article 19.) The ISRC is the international identification system for sound recordings and music video recordings. Each ISRC is a unique and permanent identifier for a specific recording that can be permanently encoded into a product as its digital fingerprint. Encoded ISRC provides the means to automatically identify recordings for a variety of uses, including tracking for royalty purposes.

The treaties prohibit removal or alteration of rights management information in the course of inducing, enabling, facilitating or concealing infringements of treaty rights. They further prohibit dealing with copies of phonograms from which rights management information has been altered or removed, given knowledge that removal was without authorisation. Electronic commerce in creative products such as sound recordings will rely heavily on this sort of digitally encoded information to manage licensed activities, track compensable uses of phonograms and order the flow of royalties to production companies, authors, performers and their societies.

III. New Licensing Mechanisms

a. Industry developments

The role of collecting societies and individual recording companies in licensing commercial end users has already started to change. Information technology makes it easier to identify and track compensable uses, to manage revenue streams and to account to other right holders and therefore provides a very important tool for collecting societies and for individual companies licensing activities.

Some of the first new initiatives in this area have involved the licensing of simulcasting-where traditional broadcasting stations put their programming on the Internet, and webcasting-that is, Internet-only program channels. For example, the press reported recently that www.com, an Internet webcaster, had signed an agreement with the Recording Industry Association of America (RIAA) clearing the producers' digital rights for such webcasting. Other direct and collective licensing models are under development. Predicting the mix of individualised and collective licensing is not possible at this early date as market experience remains to be acquired.

b. Copyright challenges

For phonogram producers traditionally, acts such as broadcasting often involved a 'one size fits all' blanket licence. With such traditional technology and licensing systems, no refinement was possible to take account of how music could be enjoyed, whether once or many times, whether in combination with other recordings of a similar genre, or whether passively or with the power to select, copy or otherwise interact with the composition, production or recording artist.

We now have the opportunity for a much more appealing range of options to become available. An increase in the diversity of outlets for recorded music can, for example, create opportunities to 'tier' exploitation of music in ways long known to the film industry. A pay per view concert could be offered, with additional charges for authorised downloading; a studio version could follow through on-demand distribution via a subscription service; traditional retailing could follow at a later point. Consumers could be offered performances, bundled as albums or unbundled as tracks, for authorised private copying in parallel with 'album' retail sales.

As the usage of phonograms and creative works becomes more refined in these ways, two things are clear. First, producers increasingly will need exclusive rights in order to support the development of these more sophisticated types of licensing options and business models. Under an exclusive right, the producer's business model can take account of a variety of relevant factors which blanket licensing could never deal with, such as new means of exploitation, the differing value of music in different types of services, and the differences in value between one-time listening and extended or permanent listening options.

Second, contractual freedom must be maintained in order to allow producers and other rights holders to fashion these new markets in the way consumers find the most appealing. This can only help to increase competition, increase the amount of music available all over the world, increase its diversity, allow distribution to wider audiences at lower costs, and improve the range of options available to consumers.

IV. The destructive force of piracy

a. Industry developments

1. Traditional piracy

The over-capacity of CD production in Asia, in particular the territories of Taiwan, Macao Hong Kong, and other Southeast Asia countries still represent the greatest threat to the recording industry. The global pirate music market topped 2 billion units, worth an estimated US$4.5 billion, in 1998. Sales of pirate music CDs stood at 400 million units. Southeast Asia saw the most evidence of escalating illegal optical disc production, while Ukraine has displaced Bulgaria as the greatest pirate threat to the legitimate industry in Europe

CD piracy presents a completely different problem than cassette piracy, in that CD piracy involves higher volumes, more cross-border activity and increasingly organised criminal conspiracies. The growth in music piracy tracks an even more dramatic increase in the global manufacturing capacity of all formats of optical disc. The global manufacturing capacity of all CDs, CD-Roms and Video-CDs rose by an estimated 20% to about 16 billion units in 1998-nearly three discs per year for every man, woman and child on the face of the planet!

The chain of supply of pirate CDs now almost always involves several countries. Thus we now see discs manufactured in Southeast Asian countries being shipped to certain European destinations and Latin America via third countries.

2. Internet piracy

Despite the appealing prospects of the Internet for exciting new on-line uses, information networks and PC power can also facilitate unauthorised copying and transmission of phonograms among the 200-million Internet users world-wide. While technical limitations on the speed and quality of downloaded sounds have provided some limited defence against these sorts of infringements, the IFPI estimates that approximately one million unauthorised MP3 files reside on the Internet at the present time.

As a practical matter, the unauthorised upload, download or transmission of a sound recording is no less prejudicial to the financial incentives for production of sound recordings, and thus no less effective in drying up creativity, than its physical-piracy counterparts. As a consequence, today's unauthorised digital broadcaster or Internet service is no less piratical than their less sophisticated associates in the analogue world.

b. Copyright challenges

The international community has recognised the need for action against the scourge of piracy. Both the WTO TRIPs Agreement and the WIPO treaties call for procedures that permit effective action against acts of infringement, including 'expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements.' (WPPT, Article 23; TRIPs, Article 41.) Some very practical recommendations along these lines follow:

1. Regulation of CD production. The optical-disc plant is both the potential source of a flood of counterfeit products, as well as a natural 'bottleneck' where such products can be stopped. We therefore highly recommend the approach of such governments as Hong Kong, which has adopted legislation requiring a permit for the import and export of optical disc manufacturing equipment, requiring optical disc manufacturing facilities themselves to be registered, and allowing authorities to enter premises to conduct regular monitoring. Also very helpful are provisions that require all CDs to have an approved code.

2. Deterrent-level damages and penalties. Intellectual-property rights are meaningless if legal procedures and sanctions are not adequate to detect and punish violations. This can only be remedied through the adoption of damages awards, including pre-determined, additional and/or punitive damages, as well as stiff criminal penalties, that make it more risky, embarrassing and expensive to engage in acts of piracy than to obey the law.

3. Extending the notion of 'piracy' to encompass infringing material made available widely over the Internet. Traditionally linked to infringements involving reproductions for commercial purposes and on a commercial scale, the notion of 'piracy' must now address the realities of global networks, where infringements in one place become instantaneously available in every place. The sanctions that piracy in the Industrial Age attracted must be extended into the Information Age, in which intentional but even non-commercial posting of sound recordings on networks puts copies within the reach of hundreds of millions of people to the instant detriment of all rights holders.

4. Strong government commitment to eradicating piracy. It is crucial that governments view copyright enforcement as a law-enforcement priority and take action to deal with piracy of sound recordings. An efficient, specialised government enforcement task force with sufficient resources, and clear anti-piracy objectives, is necessary to ensure that law-enforcement agencies actually do enforce the laws against intellectual property crime.

Conclusion

The recording industry is facing a future that may be very different from its past. New disc and equipment standards, new encryption technologies, compilation-disc kiosks, interactive transmissions of music in many different formats and on-line talent scouting, may well change the way that people enjoy music. Copyright needs to adapt in a number of ways to keep pace with these exciting developments. But its purposes remain the same-to encourage the production and dissemination of creative works and phonograms by ensuring financial rewards for both creators and investors. Copyright will also continue to develop and preserve local cultural traditions, by protecting them not only against theft in their own right, but also against unfair competition from low-priced counterfeits of foreign works and phonograms.

The WIPO treaties guide the way for adapting international copyright and related rights to the Global Information Society. They are critical for creating a legal environment in which producers can protect phonograms against infringement in information networks, and develop diverse licensing schemes for on-line exploitation of phonograms. The treaties have created a firm link between the letter of intellectual property rights and the use of technological measures to control and administer the exercise of those rights. The most important goal now should be to see that both treaties are promptly signed, ratified and implemented by the greatest number of countries. In the Asia region, we applaud Indonesia for being the first to ratify either of the treaties, and call on all of the countries in the region to adopt both treaties promptly and faithfully.

Finally, the traditional need to fight piracy has not changed. Piracy of physical product remains a very serious concern, and the rampant problem of Internet piracy requires a renewed commitment to eradicating the blight of piracy plaguing the creative industries. A strong government commitment, regulation that stops counterfeit CDs at the replication plants, and legal procedures and remedies that actually deter and prevent piracy, will go a long way towards deterring piracy in both the traditional market and in the world of electronic commerce.

For more information, contact Allen Dixon at IFPI Secretariat, 54 Regent Street, London, W1B 5RE, England. Phone: +44 207 878 7900, Fax: +44 207 878 7950; E-mail: adixon@ifpi.org