July 21, 2002

Due to a surge of demand for CD-R discs, the globally pirated music industry remained stable at around $4.3 billion in 2001. This was the verdict of the latest annual report by the International Federation of Phonograph Industry.

According to the details of the IFPI’s Music Piracy Report 2002, almost 40 per cent of all the pre-recorded CDs and cassettes that were sold in 2001, were pirated. However, the latest worrying trend that has emerged, is that pirates now prefer CDs to cassettes. Discs make up 51 per cent of the global pirate sales. The menace of music piracy isn’t only about poor quality music CDs. There are big bucks involved, with the governments and the music industry losing millions of dollars. Governments in particular suffer as they lose dollars in tax revenues as well as loss of new investment. In the US alone, copyright industries contribute nearly US$535 billion to the GDP.

In the latest study the real dollar difference is almost negligible. However, the main worrying point for artists and the recording industry is the increase in demand for pirated music discs. Not just any CD but those produced on the CD-R format. The report also showed that for the first time ever cassettes were no longer the dominant medium of music piracy. Cassettes only represented 49 per cent (having fallen from 65) of the total pirated market.

Of all the CDs that were sold in 2001, 28 per cent were pirated. This was a jump of eight per cent from the year before that. This surge in demand for CDs is even more worrisome when facts revealed that almost half of these pirated CDs came from CD-R operations. In 2000, one in ten pirated CDs were on the CD-R format. In 2001 this difference had narrowed down to one in four. And if this figure isn’t convincing, then dig this: in 2001, 450 million units of pirated CD-R were sold — up from 165 million in 2000.

The increase in demand for CD-R formatted pirated CDs is attributed to the ease with which CD-R plants can be set up. This in turn has led to a fall in the price of the final product. Besides the rapidly falling prices of mostly Taiwanese blank CD-R, it is the widespread availability of cheap CD-R replication equipment, and high-speed burners. This dangerous combination has resulted in the increase in piracy of local music. Previously, larger CD plants concentrated on pirating music by major international artists that were easily sellable all over the globe, CD-R operations have successfully captured the market for local artists as well. But above all, compared to the traditional audio CDs, ones that are processed by factory production lines require much smaller operational levels and can easily be set up in a home garage or lab. It is from these garages that the pirated music industry has spread its tentacles and invaded every market in the world, including the US.

According to the IFPI report, it just isn’t about loss in dollar investment that is giving the recording companies a hard time. Music piracy has also nurtured organized crime. According to law enforcement agencies around the world, money from pirated CDs is at times channelled into the drug trade, money laundering and other forms of criminal activity.

Governments around the world should formulate copyright laws and optical disc regulations to control pirate CD manufacturing. To aid these laws, proactive and efficient enforcement by the police and customs, along with aggressive prosecution of crimes within the judicial system should be activated.

Of the countries that are the largest markets for music pirated goods, China tops the list with 90 per cent of the music cassettes and CDs being pirated there. Pakistan, too, represents one of the more serious pirated markets with levels exceeding 50 per cent. Lack of an effective copyright and optical disc law, and a growth in unregulated CD plants has had an adverse effect on proper regulation of the music industry. Also, due to a small or almost non-existent local industry, most of the product manufactured in the country is largely exported to India, Europe, Asia and North America.

Last year, the music industry really got into action and an unprecedented number of enforcement actions were taken. A large number of CD-R discs were seized and CD plant lines were neutralized. Still, the efforts of the industry will only be truly effective when they are an integral part of the traditional system of law enforcement.

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