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
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."
Anti-Piracy Bill
- 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.