Russia Teams up with IFPI

Russia has a new organization that will promote a legitimate music industry and fight industrial piracy, according to mid-May reports from the International Federation of Phonographic Industries.

Representing approximately 70% of the Russian music industry, the National Federation of Phonogram Producers(NFPP) has officially joined the IFPI, comprising 1500 member record companies from more than 70 countries. The two organizations held their first joint meetings in Moscow on May 14, in which they vowed to fight against piracy on many fronts, including campaigning for copyright enforcement from the Russian government.

Piracy of music, film, and computer software is an industrial activity in the vast country. The IFPI estimates that Russia's disc-replication industry is capable of producing 200 million units annually, four times the level needed to meet legitimate demand. Internal trade in pirated music is worth approximately US$240 million, making Russia the second-largest violator of copyrights. China is #1.

"The piracy situation here is both frightening and daunting," Universal Music International president John Kennedy told Dow Jones Newswire "Russia today is one of the biggest pirate centers in the world." Kennedy claims that there are 18 illegal CD factories operating in Russia, accounting for millions of cheap counterfeit copies. Private piracy is also an inherited way of life. During Soviet times, the only way ordinary citizens could enjoy officially banned music or literature was by making their own copies.

The NFPP hopes to bring Russian musicians, songwriters, engineers, and producers into a legal modern market economy. "The creation of NFPP is a great achievement for the Russian record industry," said Yuri Slyusar, chairman of the NFPP's Council of Directors, and general director of Monolith, an independent record company. "It gives all record companies in Russia, national and international, a much stronger voice than we have ever had before in developing a successful legitimate Russian music industry and in fighting the problem of piracy. We must win that fight with the support of the Government, or else piracy will silence our artists and destroy our recording industry."

The NFPP may gain government cooperation by stressing the tax revenues lost to pirates, according to an IFPI report. Reinforcing their image as allies, the NFPP and IFPI issued a jointly developed question-and-answer document, "Developing a Legitimate Music Market in Russia." The Russian market is a growth area for the music industry, with a 17% gain in sales in 2001, despite a global decline. The IFPI expects the Russian music market to double by 2010. " This music market has huge potential," said IFPI chief Jay Berman, "But only tackling Russia's chronic levels of piracy will release that potential. The international industry will work to achieve this with both NFPP and with the Russian Government. The critical priorities for the Russian music industry are stronger anti-piracy enforcement, modern copyright laws and proper regulation of its CD plants." The launch of the NFPP coincides with other steps to legitimize the Russian economy, including the nation's planned entry into the World Trade Organization (WTO).

In other piracy news, the IFPI reported May 24 that Spain's national police had seized nearly two million blank discs that were destined for use by industrial pirates. In a series of raids in late May the Guardia Civil confiscated 1,725,000 blank CD-Rs, industrial production machinery, and software used to make illegal copies of music recordings. They also broke up a criminal network that included a Madrid-based distribution company. Music piracy has reached epidemic proportions in Spain, where it is estimated to account for 30% of the market. "This is a great example of how a decision by the IFPI European Executive Committee to focus on Spain was translated into a major successful, cooperative effort . . . It proves that working together, we can deal the pirates a blow," Jay Berman said of the Guardia Civil action.