If you'd like to see how much theft cost the music producers, check out the following.
Technology News
Fri, 11 Jun 1999, 1:20am EDT
Music Industry Lost $10 Bln in 1998 From Piracy; Internet Partly to Blame
By Daniel Tilles
Music Piracy Stole $10 Bln in 1998 Industry Music Sales; IFPI
London, June 10 (Bloomberg) -- Music piracy cost the
recorded music industry up to $10 billion in lost sales last year
as growing levels of theft from the Internet compounded the long-
standing problem of illegal manufacture of CDs and cassettes,
industry officials said.
Sales of illegal recordings totaled about $4.5 billion in
1998, the International Federation of the Phonographic Industry
estimated. With pirate prices depressed last year due to
recessions across much of Asia and Latin America, however, the
industry body said the figure translated to 20 percent or more of
total industry revenue.
While legitimate global recorded music sales rose 3 percent
in 1998 to $38.7 billion, illegal sales of copyrighted music have
boomed as manufacturing capacity increases and organized crime
becomes more involved, the IFPI noted.
''We are dealing with theft here -- there should be zero
tolerance for theft,'' said Rudi Gassner, president and chief
executive of BMG Entertainment International, a unit of
Bertelsmann AG. ''We must say clearly that one cannot turn a
blind eye to this problem.''
The IFPI estimated that unit sales of pirated music
including cassettes rose 3 percent last year, topping 2 billion
units and representing 33 percent of all global music sales.
Trade in illegal CDs rose about 20 percent to 400 million units.
Music piracy represents a small part of the overall disc
piracy problem, the IFPI said, as the total manufacturing
capacity for CDs, CD-Roms and Video-CDs rose 20 percent to around
16 billion units last year.
The manufacturing over-capacity increase has been greatest
in Hong Kong where production is forecast to surge to 2 billion
units in 1999 from 600 million units last year.
Elsewhere in Southeast Asia, Taiwan, Macau and Malaysia have
domestic CD demand that represents only a small fraction of total
CD production, while Ukraine has replaced Bulgaria as the
greatest threat to the industry in Europe, the IFPI said.
Russia, Israel and the Czech Republic have far higher
production abilities than justified by national CD demand as
well, contributing to the piracy problem.
''Israel has been put on the U.S. government watch list for
copyright infringement for the first time ever,'' Gassner said.
Internet Risk
At any one time, the IFPI said there are more than 500,000
illegal music files available for illegal downloading on the
Internet, though the industry is trying to combat this.
In March, Seagram Co.'s Universal music unit, EMI Group Plc
and Time Warner Inc.'s music arm asked the Norwegian police to
prosecute Fast Search & Transfer ASA, which provides a directory
of MP3 audio files on the Internet, for copyright violations. The
investigation is ongoing, the IFPI said.
While ''aggressive'' action is being taken against pirate
sites, the IFPI acknowledged the problem won't go away.
''Internet piracy will remain a serious problem for the
legitimate recording industry,'' it said.
Home CD players that can copy CDs have also exacerbated the
piracy problem. While illegal CD manufacturing is worst in
Southeast Asia, Eastern Europe and Latin America, illegal CD-R
copying as it's called became a ''particular problem'' last year
in France, Germany, the Netherlands, Greece, Japan, China, Mexico
and the U.S., the IFPI said.
''The CD-R machine is now extremely affordable in the U.S.,
this means that you are seeing people make copies who are not
necessarily aware they are doing something illegal,'' said Helen
Snell, a media analyst with Dresdner Kleinwort Benson. ''The
industry didn't care as much when people were copying cassettes
because the quality was poor. With illegal CDs quality is so
high, however, it discourages people from buying the legitimate
copy.''
One way the industry is attempting to counter the growing
digital music threat from the Internet and other devices is via
the Secure Digital Music Initiative, a group of about 150
companies from the music and technology industry racing to
develop standards for ensuring copyright protection of digital
music either downloaded from the Internet or transferred from
other media.
While technical details have yet to be completed, the system
is designed to be ready in time so that portable music devices
can incorporate the technology in time for Christmas.
Industry Response
The IFPI said that authorities in the past year seized 60
million illegal discs, more than 33 percent of them music CDs. Of
these, 40 million discs were stopped in Hong Kong and another 8
million snared in Panama.
The industry said it stepped up its fight against piracy
last year, implementing a global enforcement structure including
investigators and technical support first put in place in 1997.
Criminal proceedings have also been brought against illegal
CD manufacturing plants in North America, Europe, Asia and the
Middle East, the organization said. Cooperation between different
sectors of the disc industry -- music CDs, CD-Roms and Video-CDs
-- was also intensified last year.
At the same time, government support is imperative, both in
enacting stricter copyright protection legislation and in
enforcement. ''I think Washington has been much more responsive
to this issue than either Europe or Asia,'' said Gassner.
Gary |
