Music piracy: a worldwide issue, different means but same results

Beneficiaries of music piracy

a. There is an obvious benefit to consumers: counterfeited products are cheaper than legally made alternatives.^18(*)

b. Piracy has increased the size of product markets by making goods available to people who might not otherwise be able to afford them. According to a retailer in Bangkok «if I sold (the real thing), I wouldn't even sell 10 percent of what I'm selling now.»^19(*)

c. While pirate manufacturing and supply chains are not always domestic, they are least regional, so a person buying music in Hong Kong could be supporting a factory in China or Malaysia, with smuggling, distribution and sales taking place in between.^20(*) In the case of Peru, replication of the music is accomplished locally.^21(*)

Victims of music piracy

a. Those most affected by piracy are the music recording industry. The total global music pirate market in 2001 was estimated to be worth US$ 4.3 billion against 4.2 US$ billion in 2000. A total of 1.9 billion pirate recordings, including discs and cassettes, was sold in 2001 up slightly from 1.8 billion in 2000.^22(*) This means that two of every five recordings sold worldwide is an illegal copy.^23(*)

Legal production plants of CDs, which are supposed to work together with the music recorders, are also involved in piracy. For example, they may be less strict in adhering to copyright laws when taking orders. This is due to a surplus of CD production plants; approximately double the industry's demands. ^24(*)

The domestic market suffers the most harm because music piracy obliges local producers to raise their prices more and more in order to cover their costs. Local producers are, in most cases, interested in searching for and producing local talent. This phenomenon not only occurs in Peru, it is global. For instance, the good news for the Brazilian artists is that the domestic market consumes 65% domestic product, up from 55% ten years ago. The bad news is that 90% of the sales of music in the country are pirates.^25(*) As a result, domestic music will die out while the flood of imports continues without a crackdown on piracy. In the late 1980s in Africa, the government did not enforce copyright laws and music piracy killed the Ghanaian record industry.^26(*)

In this context, it is logical that, the record labels may be forced to reduce their artist roster because it is impossible to compete against theft.^27(*) It is likely that they will seriously consider whether it is worth investing if they know that little to nothing will be gained.

b) The musical artists themselves are also hurt. They lose royalties they would have received if a legitimate recording had been purchased. Steven Albimi, an independent record producer who produced «In Utero» of Nirvana, wrote a very illustrative article about how much money a band receives to sign with a major record label. He says:

With the help of a video, the album went like hotcakes. They sold a quarter million copies! (...) The band is now ¼ of the way through its contract, has made the music industry more than 3 million dollars richer, but is in the hole $14,000 on royalties.^28(*)

Artists must negotiate their contracts in the best way possible.

Specially, local artists are affected. The international recording invests hundreds of millions of dollars- up to 15% of its turnover in some countries - in new talent.^29(*) But, lower profits for selling of legitimate copies means less budget to discover new artists.

In the case of bootleg recordings, they damage the artist's privacy rights.^30(*) For example, an artist who comes across one of his or her bootlegged performances might feel as though it does not accurately reflect his or her talents and should not be heard or seen. There are two reasons behind this: the poor quality of the recording and the poor quality of the performance.^31(*)

Once, David Bowie bought a bootleg video of his own show and was so disturbed at the quality that he made an official complaint to his record company and the salesman was arrested.^32(*) A spokesman also stated «like all artists, {Bowie} secretly quite enjoys listening to unauthorized recordings of his shows, but on this occasion he was concerned about his fans being ripped off.^33(*)

Artists have a disincentive to create music if their creativity will provide no reward. Pirates will take all of the profits. Therefore, piracy suppresses creativity, the most precious attribute of man. This is its most dangerous and far - reaching consequence.^34(*)

Luciano Pavarotti reasserted this concept: »...artists and composers particularly the younger ones will not stand a chance of creating music in the future if their recordings are simply stolen.»^35(*)

Some artists and commentators believe that copyright is Human Rights.^36(*) Thus, this right would deserve better protection by the States.

c) Governments lose a great amount of money. Value added tax, income tax and company taxes would be received if legal commercial transactions of sound recordings occurred. Pirates affect governments, because the distribution of pirated goods avoids regular channels of commerce and a state loses millions in tax revenues. Thus, local governments are robbed of an important part of their tax base, and local economies are placed in jeopardy.^37(*)

This fiscal loss and the diminished incentives to invest in the creation of new products leads to less direct and indirect employment in the entertainment industries and other skilled, high income employment fields.^38(*) A drop in piracy is directly and indirectly related to the creation of new jobs. Lastly and on a more general level: piracy holds back economic growth.^39(*) Piracy acts as a brake on investment, growth and jobs. In today's global economy, intellectual property is an engine of growth.^40(*)

d) Although it may sound contradictory, consumers are also the victims of piracy. The price of legitimate recordings has increased because of the financial loss suffered by the record industry.^41(*)

Piracy affects consumers, who have no redress for fake video products or virus-ridden software or incomplete audio-CDs, etc. They also do not receive any after-sales service.^42(*)

Moreover, consumers get less diversity and less choice because of the reduction of artist's roster offered by the record producers.

* ¹⁸ Craig Joyce et al., Copyright Law, 208 (2001). In their opinion record pirates can undersell legitimate companies because they do not have to pay the costs of producing a record, the royalties owed to the performers or the advertising and promotional expenses associated with marketing an album. Additionally, record pirates reproduce only popular albums. Record Companies must use the rare profitable albums to support the costs of producing the many others, which lose money.

* ¹⁹ Ruppenthal, supra n. 7, at 152.

* ²⁰ Id., at 151.

* ²¹ International Intellectual Property Alliance (IIPA), 2002 Special 301 Report Peru < http://www.iipa.com/rbc/2002/2002SPEC301PERU.pdf> (accessed Sept. 11, 2002).

The IIPA in an organization that represents a significant segment of the Copyright Industry, the alliance consists of the Computer Software and Services Industry Association, the American Film Marketing Association, the Computer and Business Equipment Manufacturers Association, the Motion Picture Association of America, the National Music Publishers Association and the Recording Industry Association of America

* ²² Id.

* ²³ International Federation of the Phonographic Industry (IFPI), Global Report Shows Disc Piracy 50% Up Despite Sharp Increase in Enforcement Actions < http://www.ifpi.org/site-content/press/20020611.html> (accessed Oct.19, 2002).

* ²⁴ Rebeca Lim, One Third Of World Piracy Sales Are CDs, The Straits Times, June 14,1994, quoted in Linda W. Tai, Music Piracy In The Pacific Rim: Applying A Regional Approach Towards The Enforcement Problem of International Conventions, 16 Loy. L.A. Ent. L. J. 179 (1995).

* ²⁵ Robin Ann King, Copyright Protection & Piracy In The Latin Music Market < http://www.acceso-access.com/musiccopyright.htm> (accessed Dec. 04,2002).

* ²⁶ Id.

* ²⁷ IFPI, Music Piracy Report 2002, < http://www.ifpi.org> (accessed Sept. 06,2002).

* ²⁸ Albimi, supra n. 16.

* ²⁹ IFPI, supra n. 23.

* ³⁰ RIAA, Copyright Basics, Federal Laws < http://www.riaa.org/Copyright-Laws-2.cfm> (accessed Nov. 01, 2002). The federal Anti-Bootleg Statute {18 USC 2319 A} prohibits the unauthorized recording, manufacture, distribution or trafficking in sound recordings or videos of artists' live musical performances. Violators can be punished with up to 5 years in prison and $ 250,000 in fines.

* ³¹ Clifford A. Congo, Drawing A Distinction Between Bootleg & Counterfeit Recordings & Implementing A Market Solution Towards Combating Music Piracy In Europe, 17 Dick. J. Intl. L. 396 (1999).

* ³² Id.

* ³³ Id.

* ³⁴ Miha Trampuz, Examples & Problems of Copyright Enforcement, Intl. Co. & Com. L. Rev. 174 (2002).

* ³⁵ IFPI, supra n. 27.

* ³⁶ Audrey Chapman, UNESCO, Copyright Bulletin, Approaching Intellectual Property As A Human Right < http://unesdoc.unesco.org/images/0012/001255/125505e.pdf> (accessed Nov. 01, 2002) Artistic and scientific works are not first and foremost economic commodities whose value is determined by their utility and economic price tag. A human right approach recognizes that an author, artist or creator can be a group or a community as well as the individual. A human rights approach also takes the implicit balance between the rights of inventors and creators and the interests of the wider society within intellectual property paradigms and makes it far more explicit and exacting. In conclusion, a human-rights orientation is predicated on the centrality of protecting and nurturing human dignity and the common good and welfare of the society.

* ³⁷ IFPI, supra n. 23.

* ³⁸ Trampuz, supra n. 34, at 175.

* ³⁹ Id.

* ⁴⁰ IFPI, supra n. 27.

* ⁴¹ Trampuz, supra n. 34, at 175.

* ⁴² Id.