IFPI Press Release, June 10, 1999
Music Industry Sees Global Pirate CD Traffic Up 20%
Governments Urged to Crack Down Against illegal international Traders
London, June 10, 1999
Worldwide sales of pirate music CDs rose by nearly 20% in 1998, fueled by an explosion of unregulated manufacturing capacity and by a sophisticated network of pirate traffic between South East Asia and Latin America.
The latest assessment of the proliferation of CD piracy worldwide was announced at a press conference today in London, where international recording industry heads urged governments to modernize their laws and improve enforcement strategies to deal with the problem.
Pirate recordings outnumbered legitimate music sales in twenty countries (up from 14 the previous year). Problem countries that have entered IFPI's highest-range bracket with a piracy rate of more than 50% are Estonia, Latvia, Hong Kong, Malaysia, Ukraine, Israel, Palestine Authority and Nigeria.
The 1998 figures are produced by IFPI, the organization representing the recording industry and coordinating its fight against piracy. IFPI estimates that pirate CD sales totaled 400 million units in 1998, at a value of US$4.5 billion.
In several countries, notably Brazil, Malaysia and Poland, the combination of inadequate enforcement and the impact of last year's economic crisis has thrown into reverse improvements in piracy levels in recent years.
However, 1998 also saw a number of successes as IFPI's newly-formed international anti-piracy team. recruited mainly from police forces across the world, completed its first year of operation.
Those successes point to a growing involvement of organized crime in the global traffic of pirate CDs. Huge seizures by police and customs in Hong Kong and South America show an unprecedented level of sophistication by criminals targeting music markets across national and continental borders.
The trend has continued into 1999; in April 14 Italian Mafia members were arrested for their part in an international piracy ring stretching from Italy to Russia and South East Asia. And in Latin America, some 15 million CDs have been seized between July 1998 and April 1999, all produced in south East Asia and most enroute to Brazil.
Piracy on the Internet, most commonly in the MP3 format, is also a fast-growing threat to the legitimate recording industry. It is estimated that there are some half a million illegal music files on the Internet, and IFPI has stepped up its action accordingly. In 1998 IFPI and its national groups and the RIAA took up the fight against Internet pirates. Several thousands sites hosting illegally posted sound recordings were closed down.
In a dual strategy to develop legitimate on-line commerce, the recording industry is also working with technology companies to develop standards of copyright security for a legitimate on-line music market in the Secure Digital Music Initiative (SDMI), a forum launched in December 1998.
At the press conference Rudi Gassner, President of BMG Entertainment International and Jay Berman and Iain Grant, respectively Chairman and Head of Enforcement of IFPI, spelled out the recording industry's needs in the fight against piracy.
Priority measures include the introduction of new laws to regulate CD production, already introduced in Bulgaria and Hong Kong; far tougher penalties to deter the pirate manufacturers and traders; more effective management of customs and police resources targeted at piracy; and improved judicial procedures to ensure investigations of CD piracy rapidly lead to conviction.
Berman said: "Fighting music piracy today means fighting a huge, organized, illegal international business. Our industry dedicates large resources to that fight, but we need, above all else, the support of governments.
"We need stronger laws and effective enforcement. In today's global marketplace, no government can afford to stand by and let piracy stunt its economy, rob its culture and damage its international reputation."
Gassner said: "The recording industry is totally dependent on protection from piracy in its markets worldwide, and companies such as BMG are in the front line of the battle against piracy. As an industry, we invest billions of dollars every year in developing new artists. Only strong copyright protection and strong enforcement against pirates can sustain that investment."
IFPI's report also shows:
- Total optical disc manufacturing capacity (video and audio CDs and CD ROMs) - a key root cause of CD piracy - stands at about 16 billion units and has quadrupled in the last five years, far outstripping legitimate demand.
- In 1998 there were dramatic increases in manufacturing capacity in Ukraine, Hong Kong, Macau, Malaysia, Poland and Taiwan. Ukraine has displaced Bulgaria as the piracy blackspot of Europe. Poland has seen a marked deterioration as well: in Poland there are 14 known CD plants, compared to 6 in 1997. Bulgaria is no longer a major manufacturing center for pirate CDs.
- In response to this shift, IFPI plans to open a new special anti-piracy operation later this year in Ukraine, which has a CD manufacturing capacity of 75 million units, the bulk of which is being exported.
- Reported seizures of all optical discs totaled at least 60 million units in 1998, dramatically up from 1997. The seizures reflect stepped-up anti-piracy action by IFPI and its national groups, but they are a minute fraction of the total traffic in pirate CDs.
- Cassette piracy remains a huge problem. Pirate sales of music cassettes totaled 1.6 billion units in 1998. In some markets, such as Brazil, piracy has virtually destroyed the legitimate market.
(*No data for Ukraine and Palestine Authority was available 1997, nor for Cote d'Ivoire in 1998.)
For further information contact:
Adrian Strain, IFPI: 44 171 878 7939
Catrin Hughes, IFPI: 44 171 878 7902