IFPI: Music Piracy Funding Organized Crime

A European trade group on Thursday linked organized crime syndicates to the
US$5 billion underground industry for music piracy and sounded a call for
governments to get involved to squash piracy rings internationally.

The U.K.-based International Federation of the Phonographic Industry
(IFPI), which represents 1,500 record companies in 70 countries, said more
than one billion CDs were illegally copied and sold in 2002, funding “an
illegal international business worth US$5 billion.”

“One in three of all CDs sold worldwide is a fake,” the IFPI declared,
insisting that much of the proceeds from pirated music are funding organized
crime syndicates. In its Commercial Music Piracy 2203 report, the IFPI said
the “priority countries” where music theft was rampant included China,
Brazil, Mexico, Paraguay, Poland, Russia, Spain, Taiwan, Thailand and
Ukraine.

In China alone, the bootleg CD market is estimated at $530 million, more
than 90 percent of all music sales.

While the Recording Industry Association of America (RIAA) has adopted an
aggressive litigation strategy to stamp out music piracy in the U.S., the
IFPI warned that the financial problems in the music industry went beyond
the illegal file-sharing networks.

According to the IFPI, the global pirate music market is of greater value
than legitimate music sales in every country of the world, except the U.S.
and Japan and without government backing to target the organized piracy
rings, the industry will continue to decline.

The IFPI report, which offered statistics on unauthorized CD sales, did
not measure losses from the online peer-to-peer networks, where illegal
file-sharing is rampant.

The IFPI wants international governments to impose tough jail sentences
and more stringent copyright laws to combat the organized crime syndicates.
“Today’s report comes with a three-point call for greater cooperation from
governments in the fight against piracy: first, better laws and enforcement
rules are needed to protect music; second the massive over-production of
discs needs to be regulated by effective Optical Disc Regulations,” the
group urged.The IFPI, which represents music labels including Sony Music, Warner
Music, Universal Music, Bertelsmann and EMI, also called for aggressive
prosecution for commercial pirates.

“Music piracy is serious organized crime that can only be tackled when
courts deliver serious deterrent penalties,” IFPI boss Jay Berman said in a
statement.

He said industry anti-piracy teams have stepped up enforcement activities
last year, seizing up to 50 million units of pirated discs. The group
claimed “spectacular enforcement successes” during enforcement activities in
Mexico and in the Philippines, raids that resulted in the shutdown of 71 CD
production lines, with a production capacity of 300 million CDs.