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Music Industry Crushed by FAKE CD's
July 11, 2003

Annie Lawson
Friday July 11, 2003
The Guardian

(International Article, monetary figures not converted)

The music industry is bracing itself for another battering from rampant piracy as global sales of illegal CD recordings surge through the one billion barrier.

Figures yesterday from the International Federation of the Phonographic Industry showed worldwide sales of illegal CDs last year had jumped 14% to 1.1bn in 2002, raking in $4.6bn (£2.8bn) for pirates.

The growth of CD copying and online file sharing is expected to damage growth prospects for the $32bn industry over coming years. The market shrank 7% last year and faces a decline of up to 8% this year.

The gloomy prognosis follows EMI's warning of a sharp decline in results for the first of the year, fuelled by dwindling demand in Japan.

However, EMI chairman Eric Nicoli provided a more positive assessment of the long term outlook. He said progress had been made in stamping out piracy.

His optimism is not shared in the industry. Yesterday's figures showed piracy sales last year outpaced legal recordings in 25 countries, including Russia, Mexico and Brazil - areas in which the local industry has virtually disappeared.

In Britain, where commercial piracy has not yet reached such serious proportions, more than 8m pirated CDs were produced last year.

Internet piracy poses a bigger threat to the industry - already under pressure from a dearth of talent, fragmentation in the media market and an uncertain economic outlook.

"Unauthorised consumption in the UK is a third of authorised consumption, including CD downloading, and it is a serious challenge to the health of the industry," said the executive chairman of the British Phonographic Industry, Peter Jamieson.

New figures show about five million people worldwide had used pirate sites in the past 12 months, up from three million in June 2002. The number of music files on these sites doubled to 1.1bn over the same period.

Tim Bowen, the chairman of BMG records in Britain, warned that the industry faced decimation unless governments intensified efforts to crack down on organised crime rings.

He blamed government inertia for the thriving trade in areas such as Poland, Thailand, China and Ukraine, where more than 90% of all recordings are fakes. "It impacts on developing artists - the governments around the world either don't have the will or the ability to enforce laws for piracy."

He argued against criticism of the industry for failing to protect its recordings or put catalogues online earlier.

"To date, the retail of electronically distributed music has not been there as a marketable possibility.

"The industry is going to take on board a certain amount of criticism for not having protected [recordings] sooner, but unfortunately the industry is full of people who are music producers and not technocrats."

More than 50m pirated CDs were seized last year, four times the number in 2001, with crime rings dismantled in the Philippines and Mexico. Spain emerged as a hot spot - piracy there has grown more rapidly than in any other part of Europe.

IFPI chairman Jay Berman insisted government support was needed to halt the illegal production of CDs.


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