IFPI Press Release, March 31, 2000
Italy on Front Line of New High-Tech Piracy Threat
European Record Company Heads in Rome Seek Adoption of New Anti-Piracy Law
Rome - March 31, 2000
Italy's notorious music pirates are switching tactics to try and thwart a government offensive in the country with the highest national piracy rate in western Europe.
Under pressure from police and the courts, Italy's $US150 million Mafia-infiltrated illegal music business is diversifying into new forms of inexpensive high-tech piracy which now threatens the government clean-up.
The problem puts Italy, which has a piracy rate of 25% - more than twice the rate of any other European Union country except Greece - on the front-line of a worrying new trend in global music piracy.
The problem was top of the agenda of a senior international delegation of record company heads visiting the government in Rome today. The delegation, organized by the industry's trade organization IFPI, urged Italy to adopt long-delayed draft anti-piracy legislation that will dramatically raise penalties against convicted pirates. Criminal penalties for piracy are among the lowest in Western Europe.
With administrative and national elections looming, the anti-piracy bill risks being delayed indefinitely unless it is adopted by the Italian Senate within the next few weeks. The passage of a tough anti-piracy bill has been promised for years. Further delays would call into question Italy's compliance with its obligations under the TRIPS Agreement, an issue that has already been raised by some of Italy's trading partners.
"Delaying the anti-piracy bill any further would be disastrous for the legitimate industry as well as for the artists who need their creativity protected," said Rupert Perry, Chairman of IFPI's European Board and Senior Vice President of EMI.
"Italy is once again in the international spotlight. It has an example to set in showing that strong laws and tough enforcement are the key to the fight against global piracy."
New Pirate Trend Puts Italy in International Spotlight
The key change in Italy's pirate business in the last year has been the large-scale production of music CDs by pirate cells using CD Recordable (CDR) equipment ("burners"). Mass-produced CDRs dramatically lower the cost, access barriers and risk of detection of Italy's music pirates.
These have supplemented, not replaced, the large-scale global traffic of audio CDs in which Italy is a hub and transit point. Preliminary research into the problem of recordable CDs by the international recording industry shows that Italy could be pointing the way to a disturbing new trend as the global pirate market, worth US$4.5 billion, diversifies into mass CDR piracy and piracy on the Internet.
New figures released today by IFPI show that: Italy last year accounted for more than half of all seizures of pirate CDRs reported by IFPI national associations around the world. Italy's police and customs seized 325,000 music-carrying pirate CDRs in 1999 - some 65% of all audio discs seized - out of a globally-reported total of just under 1 million pirate music CDRs. A further 200,000 pirate CDRs were seized in the first two months of this year.
The research shows that in Italy and the United States CDR piracy has taken over from organized cassette piracy. Recent raids by police have seized large amounts of stacked CD "burners" operating with an automatic loading system. An intensive week of enforcement activity around Naples and Rome in February saw 200,000 CDRs seized in one raid, along with 46 burners. Such operations have the manufacturing capacity on a par with a CD line from a small manufacturing plant.
IFPI Chairman and CEO Jay Berman said: "All the indications are that Italy is on the front line of a dangerous new form of CDR piracy, run largely by organized criminals and less easy to detect than the large-scale CD pirate operations. We recognize this has been partly a result of the success of Italy's enforcement authorities. But it underlines the critical need for the anti-piracy bill, which has now been delayed for too long."
- The Anti-Piracy Bill was first proposed by the government in October 1996 following concerted pressure by the music industry both domestically and internationally. It is now before the Chamber of Deputies, and it is scheduled to be finally adopted by the Senate in the next few weeks.
- Once implemented into law, the Bill would significantly help the fight against piracy. It would increase criminal penalties and jail terms for all forms of piracy. For serious commercial piracy, present fines of L.5 million ($2,00) and jail terms of between 3 months and 3 years would rise to L.30 million ($15,300) and jail terms of between 1 and 4 years.
- The Bill also provides administrative sanctions. These include powers to revoke business license from retailers involved in piracy, and the formation of a new government Anti-Piracy Committee to coordinate state anti-piracy efforts.
Italy: Music Market and Piracy - A Fact Sheet
The Rise of CD and CDR Piracy
- Piracy in Italy has remained over 20% for the last five years, despite a marked improvement in enforcement activity by police and customs. Italy's music piracy rate is presently 25% compared to less than 10% in every other country of the European Union except Greece. The value of music piracy in Italy is estimated at $150 million.
- Organized crime is playing a growing role in Italian music piracy. In 1999, 14 members of a Mafia gang were arrested for running a pirate ring importing millions of CD from Bulgaria, Ukraine and the Far East. The case involved members of a criminal group active in Naples. The gang was charged with conspiracy to money laundering, counterfeiting and violation of the copyright law.
- The global music pirate market has grown sharply in the last three years, due largely to the proliferation of CD manufacturing an explosion of sophisticated international traffic of pirate CDs. IFPI estimates are 400 million pirate CDs sold each year worldwide. Total pirate sales are valued at $4.5 billion per year. A growing share of this traffic is run by organized crime, where syndicates use the profits from piracy to finance drugs trading and other activities.
- IFPI is expanding its global enforcement network established by its member record companies in 1997. The enforcement team uses state-of-the-art methods of intelligence and surveillance, and assists government enforcement agencies worldwide.
Italy's Music market: Copyright is the Key to the On-line Future
- Italy's legitimate music sales fell 1% in dollar terms in 1999 to $607 million. Album sales and cassettes suffered, while there was an improvement in sales of singles and compilations.
- Internet piracy is a fast-growing problem in Italy and other technologically-advanced economies. It is estimated that there are more than 1 million illegal MP3 files on the Internet at any one time. In Italy, more than 500 sites have been shut down by the anti-piracy organization FPM in 1999.
- The legitimate recording industry is moving fast to sell its repertoire to consumers via the Internet. Independent forecasts suggest the on-line music market will grow exponentially in the coming years. One, by MBI, estimates that the on-line music market will grow to more than $5 billion in 2005, compared to less than $400 million in 1999.
- The success and security of the on-line music market depends on whether the rights of record companies and artists are adequately protected. The EU is moving to provide those rights through the EU Copyright Directive, which in turn implements the international legal framework of the UN-affiliated WIPO Treaties of 1996. It is essential that the Directive allows the use of technology to protect and deliver works, and that it protects artists and record producers from the huge threat of on-line piracy.
For further information contact:
Adrian Strain, Director of Communications, IFPI: 44 171 878 7939