Professional Documents
Culture Documents
PIRACY REPORT
PROTECTING CREATIVITY IN MUSIC
CONTENTS
03 INTRODUCTION
04 THE MANY FACES OF MUSIC PIRACY
Physical piracy shows no signs of abating
Internet piracy: losses to the industry
New forms of digital piracy
06 TACKLING INTERNET PIRACY – PROMOTING LEGAL SERVICES
Providing new legal services
Enforcement
Education: a job for industry and governments
P2P legal landscape improves
Virus fears surround illegal P2P
The spread of pre-release piracy
09 PHYSICAL PIRACY – THE INDUSTRY TAKES ACTION
New tactics prove successful in Mexico
Mass raids in Brazil
Pirates raided at Dutch record fair
Customs official arrested in Paraguay
Spanish police smash piracy syndicate
Taiwanese pirates tackled
Italy’s anti-terrorist squad seizes pirate CDs
New frontline: bars and restaurants
11 PRIORITY COUNTRIES
Brazil
Canada
China
Greece
Indonesia
Italy
Mexico
Russia
South Korea
Spain
17 SPECIAL FOCUS COUNTRIES
Bulgaria
Pakistan
Taiwan
Ukraine
19 THE CALL TO GOVERNMENTS
PAGE 3
THE MANY FACES
OF MUSIC PIRACY
IFPI estimates the trade of pirate discs was worth US$4.5 billion globally in 2005. At the same time, almost
20 billion tracks were illegally swapped or downloaded on the internet in 2005.
PHYSICAL PIRACY SHOWS NO INTERNET PIRACY: rights holder is illegal virtually everywhere in
SIGNS OF ABATING LOSSES TO THE INDUSTRY the world. P2P network operators have been
found liable for copyright infringement in
More than one in three of all music discs IFPI estimates that almost 20 billion songs countries around the world.
purchased around the world is thought to be were illegally downloaded in 2005. This is
an illegal copy. It is estimated that some 37 per based on consumer research in 10 music Services such as Grokster (now shut down
cent of all CDs purchased (legally or otherwise) markets (including the US, Germany, UK after the US Supreme Court ruling in 2005)
in 2005 were pirate – 1.2 billion pirate CDs in and Brazil) and third party surveys. and Kazaa (found infringing by the Australian
total. Pirate CD sales outnumbered legitimate Federal Court) became well-known engines
sales in 2005 in a total of 30 markets. While this shows an extremely high piracy of copyright infringement. In early 2006 the
rate for online music, it also illustrates the Belgian and Swiss authorities took action
The majority of pirate discs sold are CD-Rs vast potential for legal digital music. Record and closed down Razorback, at the time
copied on highly efficient burner machines in company revenues from digital music tripled the world’s biggest eDonkey P2P server.
small commercial labs. DVD music video in 2005 to US$1.1 billion and have continued
piracy is also expanding, affecting the format’s to grow strongly in 2006. BitTorrent
growth in many markets.
Illegal websites One new development in file-sharing
Global overcapacity in the optical disc technology is BitTorrent, which was designed
industry remains a major contributor to The term ‘internet piracy’ covers several to distribute large amounts of data between
music piracy. Global disc capacity totalled 60 different ways in which infringing music is users without consuming costly server and
billion units in 2005, compared to a legitimate distributed or downloaded illegally. bandwidth resources.
demand of only 20 billion units, according to
research firm Understanding and Solutions. Websites such as allofmp3.com host large Action was recently taken by the Swedish
Taiwan remains the largest supplier of blank amounts of music but do not have permission authorities against one of the largest BitTorrent
CD-Rs, accounting for just over a third of to copy it or deliver it over the internet. These services in the world – The Pirate Bay.
global supply. sites generally offer music either for free or at
very low prices because they do not pay Other forms of internet piracy
IFPI estimates that the global traffic of pirate artists or other rights holders for their work.
product was worth US$4.5 billion in 2005 FTP (or file transfer protocol) sites are one of
based on pirate prices. This form of internet piracy thrives in particular the ‘traditional’ forms of internet piracy and
in countries where intellectual property rights typically the first place where pirate copies of
With help from IFPI’s anti-piracy teams, are not effectively enforced or where such new recordings appear. Users can make
national enforcement authorities around the rights are weak. material available on FTP sites enabling music
globe seized a record amount of discs in 2005 and other files to be downloaded from the
– some 80 million in all. This is double the P2P Networks ‘server’ computer by thousands of people.
amount seized in 2004. In addition, 78 disc
manufacturing lines were seized (representing “Peer to peer” (P2P) networks facilitate Internet relay chat (IRC) was designed to
a production capacity of 340 million discs) as file-sharing directly between individual users facilitate communication in discussion forums
well as a record 40,000 CD burner machines, allowing distribution of a music file to millions such as news groups and fan sites but has
up from 28,000 the previous year. There was a of others. Uploading copyrighted files onto also become a vehicle for music piracy.
significant increase registered in every region. P2P networks without the permission of the
DiscsDiscs Seized
Seized
DISCS SEIZED 2002–2005 (m)
CD Burners
CD Burners Seized
Seized
CD BURNERS SEIZED 2002–2005 (000’s) “They tell me what I
90 90 45 45
do is beautiful and
350 350
CDs Burned
CDs Burned CD Albums
CD Albums Sold Sold
80 80 40 40
80 80 40 40
35 35
ask why I am not more
300 300
70 70
50 50
Units (m)
Units (m)
200 200
50 50
40 40 38 38 36 36
25 25
20 20
hand me a pirate
150 150
30 30 15 15
15 15
disc to sign.” 100 100
20 20 10 10
7 7
50 50
10 10 5 5
0 0
20022002 20032003 20042004 20052005
0 0
20022002 20032003 20042004 20052005
0 0
20012001
Carmen Paris,
20022002
20042004 20032003
20052005
LAN File
Sharing
Digital
Stream
Ripping
PAGE 5
TACKLING INTERNET PIRACY –
PROMOTING LEGAL SERVICES
The legitimate digital music business is emerging fast, offering consumers diverse channels for
obtaining music online or via mobile devices. The greatest threat to this new market is piracy.
The music industry is tackling it by various means.
PROVIDING NEW LEGAL two biggest European markets, the UK and languages and is available from
SERVICES Germany, more people regularly buy music www.pro-music.org and on the charity
from legitimate services (5%) than regularly Childnet’s website
The emergence of legitimate digital music download music illegally (4%). www.childnet-int.org/music. Most recently a
services is playing a key role in pushing back Chinese language version of the guide has
of online piracy. Today consumers are offered Research by TNS in the UK conducted in been launched in partnership with the Hong
the vast catalogue of record companies’ March 2006 suggests that more than half of Kong government.
repertoire via diverse channels. In 2005 people (56%) who have begun downloading
this amounted to a fast-growing US$1.1 in the last six months are using legal services, Digital File Check is
billion market. compared with just two-in-five people freely-available software
(41%) who have been downloading for for all computer users to
There are now more than 360 legal digital more than a year. download from
music services offering over three million www.ifpi.org. It can help
songs to consumers in over 40 countries. EDUCATION: A JOB remove or block any of the
FOR INDUSTRY AND unwanted file-sharing
programmes commonly
ENFORCEMENT GOVERNMENTS used to distribute copyrighted files illegally.
It allows consumers to avoid becoming
The recording industry has taken action Education about copyright has a vital role to
unwitting illegal file-sharers.
against illegal services and P2P networks to play in promoting a digital music business.
give the legitimate market the space to grow. IFPI runs multi-country educational projects
www.pro-music.org
Actions have been brought against illegal aimed at enhancing awareness of copyright
is a website branded
file-sharers in 17 countries outside the US. and issues surrounding music on the internet.
“everything you need to
The latest wave of nearly 2,000 cases was These have been cited as best practice by
know about music online”
announced in April 2006. the European Commission, endorsed by the
available in six languages,
International Chamber of Commerce and
that acts as a gateway to
These actions have been taken against jointly launched with governments including
more than 350 legitimate
large-volume uploaders who are distributing Austria, Italy, Ireland, Hong Kong and
sites and is a central
hundreds or thousands of copyrighted files Netherlands. They include:
resource of information about music on
on P2P networks. Profiles of these individuals
the internet.
vary markedly. They come from all walks of Young People, Music
life ranging from a French chef to a and the Internet is a
Instant messages have been sent to
Finnish carpenter. Settlements have clear and simple guide
more than 53 million heavy illegal music
averaged 12,633. aimed at parents. It
uploaders in 17 countries, warning them
explains “file-sharing” and
to stop their activities.
Independent research from market analysts “peer-to-peer” as well as
Jupiter carried out in November 2005 how the technology works,
Copyright Use and Security for
suggests that legal action is having an impact. helping them to keep their
Companies and Governments is a guide
More than a third of Europeans who file-share children safe, secure and
for employers, clarifying their responsibilities to
said they have cut back or stopped their legal on the internet. It has
keep their computer networks free from
activities. This research also found that in the been translated into six
copyright infringement. The guide is produced
jointly with the Motion Picture Association and
International Video Federation and is endorsed
INTERNET DOWNLOAD SALES (MILLION UNITS)
by the International Chamber of Commerce.
Copies can be obtained from IFPI.
Q1 2005 Q1 2006 Annual Growth
National campaigns
US have been run by
Single Tracks 76.2 144.0 89% various IFPI national
Single Tracks Album Equivalent 7.6 14.4 89% affiliates, such as the
‘Truefan’ kite mark for legal
Albums 3.0 7.4 144%
music websites in the
UK Netherlands; a film aimed at young people
Single Tracks 4.5 11.5 152% called ‘A thousand jobs in the music industry’
Japan in France and a lesson pack for schools
produced in cooperation with the Ministry of
Internet Downloads 1.1 5.9 434% Education in Finland.
Source: SoundScan, OCC UK/BPI, RIAJ. Note: Online downloads only, excludes mobile.
PAGE 7
THE SPREAD OF a period of 10 weeks from the day of the
PRE-RELEASE PIRACY first leak. The release saw an intense and
co-ordinated pre-release anti-piracy effort by
New releases are the lifeblood of the music IFPI and its national affiliates. A large number
industry and pre-release piracy has a serious of “notice and take-down” warning letters
effect on legal sales and on record companies’ were sent to facilitate the removal of the
ability to reinvest in new artists. infringing content.
Pre-release piracy is a growing problem for The industry’s anti-piracy effort focused
the music industry. New recordings can be immediately and effectively on the first leaks
posted on the internet through a range of via web/FTP sites. Within only the first two ORIGINAL ARTWORK
distribution platforms including websites and weeks of the leak of ‘Meds’, these actions
peer-to-peer (P2P) networks. They have the potentially prevented some 450,000 illegal
potential to reach mass distribution within downloads, based on an assumption of
hours. Already in 2006, key new releases by average downloads per day. This figure would
Placebo, Franz Ferdinand, The Strokes, The have multiplied rapidly in subsequent weeks,
Flaming Lips and, most recently, The Red Hot with files being transferred to other channels
Chili Peppers, were available illegally online of distribution and further proliferating.
weeks before release.
The subsequent proliferation of copies of
The Family Entertainment and Copyright Act ‘Meds’ onto P2P networks was controlled as
(2005) in the US singled out pre-release piracy a result of industry action. By release week,
as a problem and allowed for penalties to be some 14,000 uploaded copies of ‘Meds’ had INFRINGING ARTWORK
imposed on those who pirate copyrighted been made available for download on P2P
works before they are released into the networks – far less than would have been
legitimate market. available without the anti-piracy measures in
the early weeks.
The new generation of web-based pirate
distribution – web and FTP sites – are Pre-release piracy is not restricted to the
frequently the first source of illegal music on internet. Four weeks after appearing online,
the internet. News of the leak quickly spreads pirate discs of ‘Meds’ were being sold around
over blogs and chat rooms and files begin to the world; first being found in Lithuania, then
appear in P2P networks. This has a multiplying Mexico, Thailand and Ukraine. In most cases
effect over the subsequent period of weeks. these pirate copies originated in Russia.
INFRINGING ARTWORK
IFPI and its member record companies 80
actively combat pre-release piracy, ILLEGAL ALBUM FILES UPLOADED ON P2P NETWORKS
70
concentrating as closely as possible on 64%
16,000
the source of the problem. The priority is to 60
57%
14,000
tackle the first leaks on the internet, thereby
limiting the subsequent spread of illegal 12,000 50
copies, and potentially stopping millions 10,000 40
of illegal downloads.
8,000
30
Ten Weeks in the Life of a 6,000
Pirate Pre-Release 20
4,000
2,000 10
In early 2006, IFPI tracked the illegal
distribution of Placebo’s new2004
album ‘Meds’, 0 0
2000 2001 2002 2003 2005 W1 W2 W3 W4 W5 W6 W7 W8 W9
via the internet and as physical copies, over (Leak) (Release)
An initial leak of infringing files in two countries, Germany and the US, snowballed into files being found in 20 countries by the week of official release of the album.
“Piracy affects the entire music industry…all the employees that 4% Illegal downloads
work at labels, the recording studios and also the artist himself.
Let’s care about music, it’s the most valuable thing we have.” 26%
Copied CDs
Investigators recently found a legitimate The industry and local authorities in Taiwan
Dutch retailer was unwittingly selling CDs are combining internet and traditional Training Anti-Piracy Officers
made by one of Europe’s most notorious investigation techniques to tackle illegal
pirate CD factories. Research showed that music websites. The frontline in the battle against piracy
the firm had bought nearly 130,000 pirate around the world are local enforcement
units through a ‘front’ company. In June 2005 the government’s Integrated agencies. Recording industry teams
Enforcement Taskforce raided the residence advise and train them and this is an
IFPI also gave forensic assistance to of a website operator in Taipei. They found important enforcement priority for IFPI.
police in California, who took action no illegal music files in the computers onsite,
against more than a dozen plants but they did locate more than 20 optical discs In 2005, IFPI investigators trained more
manufacturing illegal discs over the past carrying infringing software. than 1,000 law enforcement officers in
18 months. The team matched seized 21 countries.
discs against exemplars from these The operator was subsequently found to
plants – proving them the source of have stored all the music files on servers in Multimedia training programmes are
illegal material. Shanghai and to be funded by a well-known available in a variety of different languages,
file-sharing service in Taiwan. Computers providing up-to-date information about
In January 2006 a case against one of the containing suspect materials and bank the identification of pirated products.
owners of these plants was brought to account books were also seized.
court. The defendant tried to deny that the A web learning project and resource
pirate discs came from his factory, but IFPI ITALY’S ANTI-TERRORIST library developed in 2005 has now been
was able to show that its scientific analysis SQUAD SEIZES PIRATE CDS translated into Portuguese and Spanish
was correct and that there was no way to to give training staff access to more
tamper with the evidence at any stage in Italy’s anti-terrorist squad conducted a series resources when tackling the crucial
its investigations. The defendant changed of raids in December 2005 aimed at Latin American territories.
his plea to guilty. The DA of the LA County dismantling an arm of the Algerian-based
Sheriff’s Department wrote to IFPI saying GIA Islamic terrorist group. A pocket guide jointly designed by IFPI
the case would not have been cracked and the Motion Picture Association (MPA)
without its support. The raids took place in Naples, Ventimiglia and has been translated and published in 12
Milan. They led to the seizure of warehouses languages and many tens of thousands
Forensic research also enables IFPI to controlled by the organisation and containing have been distributed to law enforcement
monitor the source of pirated material a large number of counterfeit products. officers worldwide.
found around the world. Armed with Colonel Grimaldi, who coordinated the raids,
forensic evidence, IFPI can work with the said the investigation proved that the group For further information please contact
relevant governments to get these illegal was obtaining funding by selling pirated and training@ifpi.org
plants closed down. counterfeit DVDs, CDs and fashion goods.
Physical piracy value US$ 85m Legal downloads 10m Physical piracy value US$ 410m Physical piracy value US$ 45m Physical piracy value US$ 70m
Legal market Legal market Legal market Legal market Legal market
retail value US$ 670m retail value US$ 410m retail value US$ 390m retail value US$ 135m retail value US$ 555m
CD album value CD album value Pirate discs sold CD album value CD album value
change 00-05 -11% change 00-05 -26% 2005 175m change 00-05 -55% change 00-05 -36%
Domestic repertoire
Physical piracy level 26% Physical piracy level 65% Physical piracy level 67% value change 00-05 -67% Physical piracy level 22%
International repertoire
Physical piracy value US$ 80m Physical piracy value US$ 180m Physical piracy value US$ 450m value change 00-05 -71% Physical piracy value US$ 75m
PAGE 11
PRIORITY COUNTRIES
BRAZIL In addition to the commercial physical piracy
problem faced by the Brazilian music market,
The Organisation for Economic Co-Operation
and Development (“OECD”) reports that
illegal downloading of music files through P2P Canada has the highest per capita incidence
Brazil’s music industry has lobbied the international networks seems to be growing of unauthorised file swapping in the world.
government for many years to undertake a at an alarming rate. Consequently, digital music sales account for
nationwide anti-piracy campaign. In 2004, less than three per cent of recorded music
these efforts began to pay off as the authorities Research by IPSOS in March 2006 shows revenue, compared to an average of six per
woke up to the scale of the problem and that one billion songs were downloaded cent across the developed world.
created a National Anti-Piracy Council. illegally in 2005 in the country. This
combination of internet and physical piracy For Canada’s music industry, the rise of file
This Council began operation in 2005 and poses a massive and continuing threat to the swapping has coincided with a 42 per
consists of officials from the Justice and legitimate music industry in Brazil. The legal cent – or CAD$558 million – decrease in
Economic Ministries, as well as the Federal market saw a drop of 19.5 per cent in units annual retail sales between 1999 and 2005
Police, Customs and participants from and 13.4 per cent in local currency sales in and a 20 per cent loss in employment.
private industry. the course of 2005. National surveys revealed that of those
Canadians spending less on music products,
There have been some encouraging signs by far the largest single reason cited was
that the Council’s efforts are starting to have Priorities: downloading/file sharing/CD burning.
an impact. Major operations have taken place
at the border with Paraguay and raids were g Continue to implement the National Plan The cause of the underperforming digital
conducted across the country mainly in São Against Piracy including additional actions market is clear from the experience of
Paulo and Rio de Janeiro. in the major markets of São Paulo and Canadian artist Jully Black. Ms. Black
Rio de Janeiro; witnessed 2.8 million illegal file swapping
The raids cut the number of pirate music requests for her music in the first two weeks
stands in both major cities. Across the g Continue to take actions to prevent the of her album’s release in 2005, while she
country CD piracy fell from 52 per cent in smuggling and illegal importations blank struggled to sell 15,000 copies of the
2003 to 40 per cent in 2005, according to CD-R’s and DVD-R’s; same album.
the latest survey conducted by the national
record industry. g Implement anti-piracy Education Physical piracy has also played a part, with
Campaigns. inadequate enforcement resources and lax
There are still major problems however. border controls allowing the infiltration of
Despite the high number of operations on pirated physical products.
the Paraguay border the illegal importation of
blank optical discs into the country continues Canada’s failure to take effective steps to
as well as the offer of illegal products in flea control digital and physical piracy has raised
market (it is estimated 300 million blank international concerns. The United States
CD-Rs were smuggled into Brazil last year). Trade Representative (USTR) has placed
Canada on an international Watch List in
The Brazilian courts still seem apathetic to 2006, and the United States will conduct an
the pirate threat – the recent raids produced Out-of-Cycle Review to monitor Canada’s
a large number of arrests but a negligible progress on intellectual property rights (IPR)
number of convictions with deterrent issues under the leadership of its new
prison sentences. The São Paulo State High government. The USTR reports that “key
Court is expected to rule later this year on the areas for action include the ratification and
important precedent judgment handed down implementation of the WIPO Internet Treaties,”
in 2002 by a lower court against Novodisc “amendment of the copyright law to provide
and Trace Disc Multimedia, CD manufacturers
found jointly liable for making tens of
CANADA adequate and effective protection of
copyrighted works in the digital environment,”
thousands of pirate CDs featuring music by and improvements to Canada’s IPR
Legitimate online services have struggled in
major international artists. If the decision is enforcement system, including addressing
the face of outdated copyright laws and the
upheld this would demonstrate the Brazilian weak border measures that allow international
resulting widespread digital piracy. It is
judiciary’s commitment to effective trade in pirated products.
estimated that more than one billion music
anti-piracy enforcement.
files were swapped online in Canada in 2005.
The Canadian Recording Industry Association
The Canadian government has a key role to (CRIA) has called on the Canadian government
play to address the threat to the country’s to adopt updated copyright laws, comparable
cultural and creative economy. Canada has yet to those of Canada’s global competitors, and
to fulfill its longstanding commitment to ratify in accordance with international treaties. It
the 1996 WIPO Treaties to protect digital has commissioned research that illustrates
copyright. The Supreme Court of Canada, in a the clear damage that illegal file swapping is
landmark case on online music, lamented that doing to Canada’s copyright industries and the
Canadian courts will continue to “struggle” to widespread support among Canadians for
apply outdated copyright laws until Canada modernising Canada’s copyright laws, and it
ratifies the WIPO Treaties. has launched a national campaign to protect
and promote ‘products of the mind’.
g Modernise copyright laws to protect The recording industry in China has sent out
copyright in the digital age and ratify the more than 1,500 warning notices to ISPs
WIPO internet treaties; calling for them to take down illegal sites; a
further 10,000 notices to remove infringing
g Educate Canadians about the importance files and has filed more than 80 civil suits
of intellectual property rights and the against internet pirates since 2003. The Greek industry also works with the
dangers of illegitimate P2P services; Ministries of Culture, Public Order, Justice and
It has increased anti-piracy action by Commerce, the Hellenic Police, the Fiscal
g Strengthen border enforcement and assisting the authorities with raids and the Police and the Judges Association on behalf
provide additional resources and training seizure of pirate music CDs. Such of the creative community.
to customs officers and domestic law enforcement actions in 2005 helped lead
enforcement personnel. to the closure of six CD plants and suspension Greece’s Ministry of Public Order and the
of business licences of eight others. This will police are cooperating in the fight against piracy.
hopefully be the foundation of a more fruitful Last year, the Hellenic Police arrested more
long-term partnership. than 2,000 people for copyright crimes in
CHINA To date, there have been few criminal cases
nearly 2,000 raids.
Physical piracy levels in China continue to brought against music pirates and the Yet these actions are undermined by the
be among the highest in the world, with over penalties are far too low. The profit leniency of the Greek judicial system and the
85 per cent of the units sold in the market requirement in the criminal code and the insufficient application of Copyright Law
being pirate. high thresholds for applying criminal penalties provisions in the courts. The Fiscal Police
also make it difficult or even impossible for also remain largely inactive in the fight against
Digital piracy is progressively worsening as criminal action to be taken against pirates. music piracy.
the number of internet users increases and
broadband penetration rises dramatically. In
2005 alone over 10 million broadband lines Priorities: Priorities:
were added in China according to Point Topic,
making it the second biggest broadband g Take criminal actions against infringers, g Introduce substantial deterrent penalties
market in the world after the US, which both for physical and internet piracy, for infringers. Criminal records should be
establishes the potential for a booming legal with severe sentences imposed; updated more quickly and notices of
digital market but also for more online piracy. arrests and convictions sent to the
g Remove the profit requirement and high immigration authorities;
thresholds for taking criminal action;
g Introduce thorough spot checks by
g Simplify censorship regulations so the Ministry of Commerce on people
that legitimate releases are not held up employed in the black market;
while their pirate clones have easy and
immediate access to the market; g Impose administrative fines for both
buyers and sellers of pirate music
g Allow foreign record companies access products using the Fiscal Police;
to the market so that they can assist in
the fight against piracy by providing g Tighten its border controls and step-up
legitimate products in a timely manner, the monitoring of organised crime rings
to the Chinese market. which are largely using illegal immigrant
labour. Illegal immigrants who commit
copyright crimes should be considered
for deportation;
Such piracy is driven by hundreds of websites GREECE g Apply the strict tax audits it applies to
offering streams, downloads or links to
unauthorised song files and the seven or so Greece’s piracy problem largely takes the Greek nationals to all workers in
specialised ‘MP3 search engines’ that offer form of pirate CD-Rs being sold by street the country.
deep-links to thousands of infringing song vendors many of whom are illegal
files for instant download or streaming. The immigrants.The physical piracy rate is
largest of these search engines is Baidu, around 50 per cent, with local and international
which has been sued by the international repertoire being hit, while internet piracy is
record companies in Beijing. also a rapidly growing problem.
PAGE 13
PRIORITY COUNTRIES
INDONESIA The police have tended not to cooperate
with the industry in these raids, although they
The Anti-Piracy Law has raised maximum fines
from 11,550 to 115,500 and minimum prison
are willing to consider forensic evidence from sentences were increased from three to six
IFPI to initiate or support enforcement action. months, although they can still be suspended.
They have also requested further training in At the same time, maximum prison sentences
the recognition of pirate product and evidence were raised from three to four years. The
handling procedures. government has also implemented the 2005
Competitiveness Decree which means that
In March 2006, the long-anticipated consumers who buy pirate goods can face a
Intellectual Property Task Force was finally fine of up to 110,000.
established by presidential decree. It is
hoped that this will provide the coordinated
response to intellectual property enforcement
that has been lacking so far from the
Indonesian government.
Physical music piracy is endemic in Indonesia There is no doubt that Indonesia is a country
with rates at nearly 90 per cent. There are wrestling with big problems, there are almost
more than 40 CD plants in the country and daily demonstrations in the capital, but there
nearly half of them are not even registered are signs that the authorities realise they need
with the Ministry of Industry as required. At to clean up their act on intellectual property.
the same time, large numbers of illegally
imported discs from Taiwan are in circulation
in the country. Priorities: Police have also stepped-up their level of
enforcement with a series of raids in 2005 in
The government has shown it understands g Improve the coordination between the which they seized a greater number of pirate
the problem at a conceptual level and is various ministries and agencies involved products and subsequently brought an
showing some promising signs of stepping-up in the fight against piracy; increased number of prosecutions.
enforcement. However, this has yet to
translate into real changes on the ground. g Step-up the role of the Ministry of Industry The police have developed an excellent
IFPI is training local authorities to enforce their from mere registration to the enforcement relationship with FPM (the Italian Music
new powers under the Optical Disc Law. of intellectual property rules; Industry Anti-Piracy Federation) and this has
This initiative has included recent sessions in helped them be more proactive about
Jakarta, Yogjakarta, Surabaya and Batam. g Work in conjunction with the industry tackling piracy than many other police forces
when conducting raids on pirate optical in the world.
Unfortunately, central government has barely disc plants to help secure evidence.
begun to get a grip on the problem. Many of At the same time, some judges have begun
the agencies and departments that deal with to impose more deterrent sentences on those
the piracy problem fail to coordinate on their caught and this has lead to greater publicity
operations and initiatives.
ITALY and subsequent public awareness of
copyright crimes. There is however a real and
The Ministry of Industry has been slow at continuing problem with the judicial system
Italy continues to have one of the biggest
monitoring pirate CD plants on the ground under which many prosecutions take years to
physical piracy problems in Western Europe,
and seems content to simply register and come to trial.
backed by organised crime. This is now
licence them – and only 24 plants are
compounded by increasing digital piracy,
currently licensed. There is no doubt though that Italy needs to go
calling for stepped-up actions against illegal
file-sharing and p2p operations. further to crackdown on the organised gangs
The police however are stepping-up their that are running much of the pirate music trade
anti-piracy activity in many areas. In late in the country.
CD-R and DVD-R burning are a major
2005 Jakarta police undertook raids against
problem and new technology means that the
high-profile targets, such as the most
manufacturing base and distribution networks
notorious shopping malls and markets. Priorities:
are becoming harder to trace.
In one day 800,000 discs were seized from
two major malls. g Incorporate meaningful deterrent
The Italian recorded music industry has
lobbied the government to introduce sentencing for copyright crimes into the
In a concerted raid on street vendors in Italian judicial system;
legislative changes to strike back at the pirates
February 2006, the Polda Metro Jaya Police
and called for more rigorous law enforcement.
arrested more than 200 people on various g Educate judges about the serious nature
Indeed successive Italian governments have
copyright infringement charges and seized of breaking intellectual property rules
tried to combat the problem, passing
in excess of a quarter of a million discs of and the network of criminals behind the
anti-piracy amendments to the Copyright
all formats. physical pirate music trade;
Law in 2000, implementing the EU Copyright
Directive in 2003 and issuing the Urbani
Decree against anti-P2P abuse in 2004. g Continue its high-profile police
crackdowns against gangs engaged
in the pirate music trade and illegal
P2P networks.
PAGE 15
PRIORITY COUNTRIES
New technology has allowed the growth
of a number of digital broadcasting services SPAIN The industry wants an amendment to the
Intellectual Property Law to take into account
(DMB) that transmit high-quality music videos technological developments and close
to mobile phones via satellite without the Spain’s piracy rate remains unacceptably loopholes that have permitted digital piracy
right holders’ permission. Record producers high for the sixth consecutive year. Major to flourish.
gained a victory in 2005 when they were police activity helped contain physical piracy,
granted exclusive transmission rights in but internet piracy is continuing to spiral. The General Prosecution Office has sent a
a new copyright law. Notice addressed to all Spanish prosecutors
By February 2006 more than four million setting out the considerations of how to apply
In April, the National Assembly passed the homes were connected to broadband the penal code in the case of offences against
Music Industry Promotion Act, which aims to services, sadly many were being used to intellectual property.
regulate service providers offering music on obtain music illegally rather than purchase
the internet. music online. Over the course of 2005 there This recent notice has been strongly criticised
were more than 500 million illegal downloads by the music and film industries as they
in Spain. A combination of new technology consider it to be flawed, especially with regard
and police crackdowns on physical to prosecuting internet piracy. These industries
counterfeiting is driving music piracy onto are requesting the General Prosecution Office
the internet. to change its approach and combat these
types of cyber offences much more effectively.
Physical piracy is far from dead however. A
new class of ‘entrepreneurs’ has emerged in
the last few years, mainly from China and Priorities:
Taiwan, who specialise in the import of illegal
recordable CDs and DVDs. These pirate g Continue high-profile anti-piracy
traders, whose companies often give the campaigns such as operation “Madrid
appearance of being legal, have imported 230 Plus” to drive counterfeit products from
million units of counterfeit product and are the streets;
In August 2005 the courts granted an using the profits from selling them to fund
injunction against Soribada, the largest local other serious crimes. g Amend intellectual property laws to
P2P service in Korea, leading to the complete close the loopholes that have allowed
shut down of the service towards the end of digital music piracy to flourish;
the year.
g Support the industry’s legal action
Despite this progress, the South Korean against mass file-sharers who are illegally
government’s enforcement actions against distributing copyrighted material on the
internet pirates remain sporadic due to the internet and educate consumers about the
lack of a centrally coordinated enforcement perils of illegal P2P networks.
agency with the power and resources to deal
effectively with infringements.
PAGE 17
SPECIAL FOCUS COUNTRIES
TAIWAN UKRAINE The government still needs to improve effective
criminal enforcement against copyright theft.
Concrete results evidenced by a measurable
The rate of physical piracy in Taiwan has There has been some progress made against reduction in piracy are sorely needed. These
continued to drop since 2002, but online physical piracy in Ukraine, but recently digital improvements are also necessary for Ukraine
piracy continues to grow relentlessly. piracy has revealed itself as a major problem. to fully comply with the TRIPS obligations of the
Estimated piracy levels for international World Trade Organization.
In 2005, the physical piracy rate was 26 per recorded music are around 60 per cent.
cent. This was accounted for by the traditional The resulting loss to the legitimate industry
stalls in the country’s night markets, often is around US$35 million. Priorities:
staffed by minors to avoid arrest by the
police, as well as the growing illegal home Law enforcement agencies have not g Take action against the pirate stalls on
delivery services. succeeded in cleaning up the many pirate street corners and in open air markets;
street selling points or the massive open air
The internet has become a major source for markets, such as the Petrovka Market in g Use the new enforcement rules
the acquisition of music, both illegally and Kiev where more than 300 stands are selling to crackdown on pirate optical
through legitimate services. Infringing music illegal material. disc manufacturers;
files are available in various formats including
MP3, midi, WAV and RAM through a variety of Ukraine hosts at least seven optical disc plants g Train prosecutors and judges to
channels including FTP sites, streaming sites with an estimated annual capacity of around understand the implications of
and P2P file-sharing services. 100 million units. The legitimate demand for copyright crime and urge them to push
discs in Ukraine is less than one-third of that for tougher sentences;
The police launched criminal actions against amount. Ukraine’s inability to properly control
two of the largest P2P services, Kuro and these plants means that production of g Improve border controls to stop the illegal
EzPeer. Kuro and its principal directors were unauthorised material will continue in the export of counterfeited materials.
initially found liable for criminal infringements near future.
and both cases are now at the appeal stage.
In 2005 the copyright sector’s lobbying
IFPI raided more than 20 large illegal music
sites between May 2004 and March 2006,
campaign paid off and the government
adopted significant amendments to its
“The ideal way
including one which provided around 500,000
songs for illegal downloading. Unfortunately,
the law does not require ISPs to take down
optical disc laws, improving the legal tools
of its enforcement regime. of educating
illegal websites and rights holders have no
power to force them to cooperate if they are
The government also announced it would
enhance its cooperation with the copyright people about
reluctant to do so. industries on intellectual property enforcement
Piracy results in job losses, undermines Making Sure the Civil Court Updating Intellectual Property Laws
creativity and deprives governments of System Works
tax revenues. Many countries still have vinyl-era copyright
In cases where infringement of intellectual laws in a digital age. They need to update their
Adequate intellectual property rights and property rights is dealt with by the civil courts, rules for the protection of copyright to ensure
effective enforcement are the bedrock of a governments need to ensure that system that loopholes are closed. Governments need
modern economy. Above all, deterrent works fairly for rights holders. In particular, to ratify and implement international copyright
penalties, effective prosecutions and sensible presumptions of copyright treaties, including the World Trade
education are key areas for governments. ownership should apply and deterrent Organisation (WTO) TRIPS agreement and
damages should be awarded. In many the World Intellectual Property Organisation
Governments can take effective action and countries legal proceedings are too slow. (WIPO) Treaties. Such measures will help
work with the music industry to turn the tide The record industry can help governments secure the long-term development of the
against piracy. This involves: train judges and provide the background knowledge economy in their countries.
on the private sector involvement in the
Ensuring Deterrent Penalties for enforcement of rights. Educating the Public About the
Copyright Crimes Importance of Copyright
‘Joined-up’ Anti-Piracy Campaigns
Copyright crimes should be treated on a par Copyright is a long-standing concept that
with other criminal activity such as theft, fraud Where there are several different government promotes creativity and underpins sustainable
and trademark infringement. In most cases departments and agencies involved in the fight economic growth but is still widely
even the most serious copyright crimes are against piracy there is often a lack of effective misunderstood. Governments could follow
penalised with fines and rarely ever with a communication. Governments should appoint the recent example of the Attorney-General
custodial sentence. Governments must a strong leading agency to coordinate of Australia who used his role as a platform
ensure that deterrent penalties are available anti-piracy activities with the political will to to explain the vital importance of copyright
and awarded for criminal infringements of drive through successful campaigns. to his country’s economy. The Finnish
copyright. Otherwise, criminals will accept government provides schools with packs
the possible monetary penalties as a cost Enforcing Regulation of Optical that they use to teach children about
of doing business. Disc Factories copyright. Other governments should put
copyright on the curriculum.
Investing Resources to Enforce Too many countries have optical disc
Intellectual Property Laws manufacturing capacities that far outstrip Getting Cooperation From Internet
demand from their legitimate markets. Service Providers (ISPs)
Intellectual property violations are too often Governments in many cases do run a
seen as ‘victimless crimes’. In fact, the victims licensing scheme and promote good business ISPs have a key role to play in counteracting
include the artists, other rights holders, practices, but they do not enforce these web-based piracy. In most customer
governments and civil society itself which is programmes on the ground and in many contracts it clearly states that users will be
damaged when the law is flagrantly ignored. cases licensed plants are churning out pirate cut off if they infringe copyright regulations.
material year-after-year. It is time these In practice this has happened in all too few
Governments need to direct resources to countries enforced their rules. cases. Governments should remind ISPs
tackle these crimes and ensure perpetrators of their responsibilities and enshrine this
are brought to court to face charges. “cut off” clause in legislation in territories
Appropriate resources include specialised where it is not already legally binding.
courts and enforcement units, as well as
customs officers who are able to spot Many governments are acting. EU countries
infringing goods and liaise with rights holders. adopted a Customs Regulation to stop pirated
and counterfeited goods at the EU borders
IFPI works with many government and a Directive listing the minimum set of civil
agencies around the world to run education measures that have to be available to enforce
programmes and is always keen to talk to intellectual property rights.
governments about helping them with this
vital work. Other governments should engage in active
partnerships with the creative industries to
help secure the long-term health of their
economies. The music industry is a sector that
promotes culture, provides jobs and brings
pleasure to billions of people. It only asks for a
fair legal framework properly enforced under
which it can continue to survive.
PAGE 19
IFPI Secretariat
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London
W1B 5RE
United Kingdom