Music pirate sales hit record 1.1 billion discs but spread of fake CD trade slows

London, 22 July 2004

Report in PDF Format

Ten priority countries named for government action
Illegal music sales valued at US$4.5 billion in 2003
A record 35% of all music discs sold worldwide are illegal copies
Traffic in fake CDs grows more slowly, with stepped up enforcement actions

Global sales of pirate music have hit another record at 1.1 billion discs annually, but thanks to stepped up enforcement efforts the fake CD trade is spreading more slowly than in recent years. Music piracy remains a huge US$4.5 billion illegal business driven by organised crime, government apathy and corruption.

These are the highlights of a new report published today by the international music industry (IFPI). The report includes a wake-up call to governments, singling out ten priority countries – 4 in Asia, 3 in Latin America and 3 in Europe – where wholesale anti-piracy offensives are most urgently needed.

Global sales of illegal music discs rose 4% in 2003 and the global average piracy rate increased to a record 35%. The ratio of illegal to legal CDs sold continues to increase: in 2000, one in five CDs sold worldwide was a pirate copy; in 2003 the ratio was one in three, and rising.

Encouragingly, music disc piracy in 2003 grew at its slowest rate in four years, indicating that enforcement efforts by industry anti-piracy teams, and by some government enforcement agencies, are now having a significant impact. There were record levels of seizures of discs and a huge increase in seizures of CD copying equipment.

The recording industry’s Commercial Piracy Report 2004 is published today by IFPI on behalf of more than 1400 hundred record companies worldwide. The report makes a 4-point “Call to Governments” asking for:

Strong and up to date copyright laws
Proper deterrent sentencing of pirates
Regulation of disc manufacturing
Commitment to prosecute copyright crime aggressively

The report names ten priority countries where governments urgently need to crack down on rampant illegal music sales, and outlines new evidence of suspected involvement in piracy by government, judiciary and civil service employees.

Notably, a long-awaited official Congressional enquiry in Brazil, a country near the top of the international piracy rankings, has exposed alleged widespread involvement in counterfeiting by politicians, judges, civil servants and thousands of others.

IFPI Chairman and CEO Jay Berman said: “Commercial music piracy dominates large swathes of the world’s music markets, despite an encouraging slowdown in growth in 2003. This illegal trade is funding organised crime, fuelling widespread corruption and costing governments hundreds of millions of dollars in lost taxes. It is destroying artist careers and music cultures, and robbing countries with high piracy rates of billions of dollars of investment they would otherwise enjoy.

“The responsibility now is for governments – and especially on the 10 priority countries our report names – to act decisively against the problem. This means proper enforcement, deterrent sentences against pirates, effective regulation of disc manufacturing and, above all, the political will to make sure real change happens.”

Top 10 Priority Countries

The top 10 priority countries singled out in the IFPI report are Brazil, China, Mexico, Pakistan, Paraguay, Russia, Spain, Taiwan, Thailand and Ukraine. These are territories that in IFPI’s view are failing to protect and enforce intellectual property rights and tackle unacceptable levels of piracy.

In terms of pirate sales value, the list is topped by China, with the largest pirate market (worth just under US$600 million) and Russia, home to a US$330 million pirate market and a massive international exporter of pirate CDs to some 30 countries.

Mexico and Brazil also feature prominently as countries that were until recently among the world’s top 10 largest legitimate music markets but whose music industry, artists and workforce have been decimated by CD-R piracy.

Pakistan has entered the list of top 10 for the first time, having evolved in the last three years into one of the world’s largest manufacturers and exporters of discs. Record seizures of discs and equipment

Seizures of industrial-scale CD-making equipment soared in the year, and plant capacity to produce 300 million discs – nearly one third of all pirate discs sold globally and equivalent to the CD markets of France and Germany combined – was taken out of action thanks to anti-piracy actions largely in South East Asia. Seizures of pirate discs rose more than 10% to a record 56 million. The number of stampers netted – the master copy used to press illicit CDs – rose to more than 12,000, six times more than in the previous year.

Piracy and Organised Crime

The report highlights actions involving teams of investigators from IFPI and its affiliates, including:

A lengthy investigation by police and IFPI investigators in Athens lead to the seizure of 200,000 discs and 123 CD-R burners and the break-up of an alleged illegal immigration ring in September 2003
Shortly before the publication of the report by Brazil’s Congressional Anti- Piracy Committee, police arrested Law Kim Chong, a major retail entrepreneur suspected of planning to bribe the Committee Chairman, Luiz Antonio de Medeiros, in order to protect his own business. Meetings between the suspect and the police were taped and filmed in a surveillance operation assisted by the Chairman of the Committee.
Police in Italy dismantled a major organised crime ring in Naples when 50 Fiscal Police raided six undercover music, film and software disc burning laboratories in October 2003. 500 burners were seized and nine people arrested.
Mexican police were involved in violent clashes with criminal gangs in Mexico City’s notorious Tepito market in a raid which netted hundreds of thousands of discs and equipment along with firearms and illegal drugs. A four-hour confrontation led to 39 arrests.
A huge seizure in Peru involving 1,000 police officers netted no fewer than 1 million burned CD-R discs in the famous “Hueco” flea market. During the operation over 400 stands were raided and 10 people were arrested

For further information please contact Adrian Strain or Julie Harari at IFPI Communications on tel: +44 (0)20 7878 7900 or access the report online at www.ifpi.org

Interviews are also available with industry spokespeople in the top ten territories upon request.

NOTES TO EDITORS

VISUALS: Copies of the photos in the Commercial Piracy Report are available upon request.
AUDIO VISUAL: Beta footage available for TV stations.

IFPI and its national affiliates have a global anti-piracy team of around 250 investigators, mostly ex-police and security service. The anti-piracy unit is a global network with bases in every continent and works in close collaboration with governments, police forces and customs departments worldwide. Its state-of-the-art investigation methods include pirate product databases and a unique forensics laboratory.

IFPI represents the recording industry worldwide with over 1,450 members in over 70 countries and affiliated industry associations in 48 countries.