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35% of All CDs are Illegal Copies

Posted By Barry Ritholtz On July 23, 2004 @ 7:28 am In Finance,Music | Comments Disabled

Despite the industry’s stalking horse obsession with P2P — the technology they both fear and fail to understand — the bigger more dangerous issue facing the major labels continues to be counterfeiting.

By their own overblown admission, the labels (via mouthpiece The International Federation of the Phonographic Industry), is making the astounding claim that one out of every three CDs sold is a counterfeit.

This mind-boggling statistic, though likely exaggerated, demonstrates what a foolhearty distraction the RIAA litigation campaign against their consumers has been. If one third of your production is essentially stolen property, than as an industry you doing something very, very wrong. Indeed, these numbers are an admission of utterly incompetant corporate mismanagement and misfocused businesses plans.

In the real world, this sort of malfeasance invariably results in management shakeups and corporate reorganizations, with the irresponsible parties given the sack.

I do not believe the industry fully comprehends the underlying problems its facing — or if they have the backbone to confront them.

Here’s an excerpt from Digital-Lifestyles [1]:

“The International Federation of the Phonographic Industry has published a report claiming that 35% of all CDs sold around the world are illegal copies – that’s 1.1 billion pirate disks. The report also includes a list of countries recommended for government action: Brazil, China, Mexico, Pakistan, Paraguay, Russia, Spain, Taiwan, Thailand and Ukraine.

Sales of illegal discs rose 4% in 2004, though the year saw the slowest increase since 2000, an indication that increased anti-piracy activity is having a positive effect.

Clearly the biggest threat to the record industry today is not P2P networks but the more traditional CD copying seen in the the IFPI’s ten priority countries where anti-piracy offensives are most needed.

The report contains a four point “Call to Governments” asking for strong and updated copyright laws, sentences to deter pirates, the regulation of disc manufacturing and a commitment to prosecute copyright infringers aggressively.

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.”

Graphic courtesy of IFPI [2]

The full report is here [2]: http://www.ifpi.org/site-content/library/piracy2004.pdf

IFPI: 35% of All CDs Sold Worldwide are Illegal Copies [1]
Fraser Lovatt
23 July 04


The Recording Industry Commercial Piracy Report 2004 [2]


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2004/07/35-of-all-cds-are-illegal-copies/

URLs in this post:

[1] Digital-Lifestyles: http://digital-lifestyles.info/display_page.asp?section=distribution&id=1423

[2] IFPI: http://www.ifpi.org/site-content/library/piracy2004.pdf

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