IFPI Press Release, June 12, 2001

Music Disc Piracy Leapt 25% in 2000;
Recording Industry Acts Against Piracy on the Internet

IFPI Publishes Music Piracy Report 2001

London - June 12, 2001
The number of pirated music discs sold worldwide soared by 25% last year, while the music industry responded aggressively to curb the spread of piracy on the internet.

Pirate sales of CDs and CD-R music discs rose from 510 million units in 1999 to an estimated 640 million units in 2000. The increase was driven largely by a proliferation of low-cost illegal CD-R copying operations that caused piracy rates to rise in many key music markets.

Globally the music pirate business, much of it backed by organised crime, was worth an estimated US$4.2 billion in 2000 - up by $US100 million on the previous year. A total of 1.8 billion pirate recordings (CDs and cassettes) were estimated to be sold in the year, meaning that one in every three recordings sold worldwide is an illegal copy.

Fighting piracy on the internet is also a growing priority for the legitimate music sector. While the average worldwide piracy rate for physical recordings is 36%, the internet is a virtually 100% pirate medium. The industry has responded with a combination of anti-piracy measures, litigation and a variety of legitimate on-line investments in the first half of 200l.

The latest overview of global music piracy is published today in a report by IFPI, the organisation representing the US$37 billion international recording industry.

Launching "IFPI Music Piracy Report 2001" Jay Berman, IFPI Chairman and CEO said: "Piracy is rising alarmingly in our established markets, and the two main reasons for that are the proliferation of new, cheap technologies for illegal commercial copying, and inadequate enforcement by governments.

"On the internet, we are an industry on the move, developing business models that will soon allow consumers to buy music online in a range of new and better ways. At the same time legislators, particularly in Europe, are doing crucial work to create the right legal environment for the online music business.

"Fighting the internet pirates, who build their business by offering recordings free, with no respect for the artist, the producer or the music, is a critical part of the move to a legitimate online music market."

Rupert Perry, Senior Vice-President of EMI Recorded Music and Chairman of IFPI's European Regional Board, said: "The music business invests billions of dollars in new artists. We cannot compete with pirates who do not assume any of that risk and who do not compensate the artists who have created the music in the first place. That is why fighting piracy, both in the physical world and on the internet, remains a top priority for our industry".

Highlights of the Report

Pirate rates up worldwide; organised crime involved

The IFPI report points to China, Russia, Mexico, Brazil and Italy as the top five countries in its priority list in terms of domestic piracy. Countries in South East Asia and Eastern Europe, particularly Ukraine, top the list of manufacturers and exporters of pirate product.

It also details the close link between music piracy and organised crime, with examples ranging from a massive credit card fraud and counterfeit CD ring in the UK to criminal syndicates working between Hong Kong and Brazil.

IFPI's figures show that sales of illegal music outnumber the legal music market no fewer than 21 countries, up from 19 in 1999. Piracy rates have worsened in particular in Malaysia, Taiwan, Indonesia, Mexico, Spain, Holland, Greece, Czech Republic and Croatia, largely due to proliferating CD-R piracy. Pirate CD-R sales worldwide nearly tripled last year to 165 million units and now account more than a quarter of all disc piracy.

Governments Must Act to Protect Culture, Economy, Innovation

The report says governments must modernise their laws - governing physical and internet distribution of music - and step up anti-piracy enforcement, which is increasingly inadequate given the scale of the problem.

In many jurisdictions, intellectual property protection is inadequate; in countries with a large CD manufacturing capacity, particularly in South East Asian and Eastern Europe, CD plant regulations are needed; and in many high-piracy markets, fighting piracy needs to become a far greater priority for prosecutors and courts.

The music industry responds

IFPI has completed the creation of its global team of more than 50 anti-piracy investigators and advisors, which was launched in 1998 and works with enforcement and customs authorities worldwide. The operation has achieved a series of successes against the pirate traffic, but is not yet reversing it.

Some of the major enforcement successes in 2000 were at plant sites in South East Asia, where large volumes of pirate CDs have been exported to markets as far away as Latin America. A total of 20 illicit CD lines were shut down in 2000 and a further 27 in the first quarter of 2001 - with an annual production capacity of 100 million CDs.

There has a also been a dramatic increase in seizures of pirate CD-Rs, particularly in the US and Latin America. Spain and Italy have also seen police actions against massive CD-R pirate operations.

Turning internet music legitimate

IFPI has stepped up the fight against internet piracy while record companies have undertaken a massive investment in online streaming and download services in order to offer legitimate recordings on line.

Among the most prominent are two internet partnerships - MusicNet, involving AOL, RealNetworks, EMI, BMG and Warner; and Duet, bringing together Yahoo!, Universal and Sony. The two most recognised online music providers so far, Napster and MP3.com, have also linked up with record companies. In the USA alone there are now more than 400 sites that offer legitimately licensed music online.

IFPl's internet anti-piracy effort operates on several fronts:

• Songbird, the internet anti-piracy software tool was launched on a public website in May. Endorsed by ten allied music sector organisations, Songbird registered more than 60,000 visits and 15,000 downloads in its first month. Songbird is a software tool that helps artists and producers locate their music on Napster and act to get it removed if they wish.
• Court cases against large-volume providers of infringing music in Belgium, France, Denmark and China have bolstered the industry's legal position in removing unauthorised music from the internet.
• Actions by IFPI and its 46 national affiliates led to 15,000 websites, containing 300,000 files, being taken down in 2000. A range of technologies are being studied that would automate this process and track internet pirate activity much more efficiently.
• Adoption of the landmark European Copyright Directive in Brussels which lays the ground for protecting the artists, song writers and record companies on the internet.

For further information contact:
Adrian Strain, IFPI, tel. +44 207 878 7939
Fiona Harley, IFPI, tel. +44 207 878 7969