Threat of Piracy to the Legitimate Industry

In 2003, world wide sales of legitimate sound recordings produced by the major record companies and leading independent labels reached $32 billion US. In contrast, pirate sound recordings were estimated to account for sales of approximately $4.5 billion US. An estimated 35% of music CDs sold in 2003 were pirate products. Total sales of pirate CDs, including CD-Recordables, topped 1.7 billion units.

Canada is currently the sixth largest market for the sale of legitimately produced sound recordings in the world. In 2003, the total retail value of all legitimate sound recording sales exceeded $940 million CDN. Based on industry statistics and international comparisons CRIA estimates that sales of pirated sound recordings drains an additional $23.5 million CDN from the legitimate Canadian market.

The loss to the industry, however, is measured in more than the monetary terms. Lost sales for record companies result in lower revenue and consequently lower investment in new Canadian recording artists and music. It is estimated in the recording industry that only 1 in 10 new releases actually generates revenue. It is the revenue from this small portion of new releases that allows for investment in new talent.

Sales of pirated sound recordings contribute nothing to Canada's cultural industries. Manufacturers and distributors of pirate recordings focus only on commercially successful recordings. The manufacturers and distributors of pirate recordings do not develop talent or pay royalties to performers and composers. Often sales taxes are not paid by the vendors or the distributors of pirate recordings. Consumers will ultimately be the victims of piracy as the lost sales translate to less investment, fewer new artists and reduced choice of music.

Piracy Definitions

Piracy of sound recordings includes three (3) specific types of infringing activities - piracy, bootlegging and counterfeiting

Piracy

• Piracy is the unauthorized duplication of existing legitimate sound recordings. Pirated products are usually recognizable by a combination of low price, poor quality of the insert cards and graphics and often by the absence of major record company names or logos.
  
• A piratical recording may be a compilation of recordings that have never been released in the same combination on a legitimate album -- for example, a greatest hits package of one artist, or a compilation of recordings by various artists.

Bootlegging

• Bootlegging is the unauthorized recording of either an artist's live concert (usually known as an "underground" recording) or of a live performance broadcast on radio or television. Many bootlegs are recorded at live concerts using a portable cassette recorder, or even taped directly from the console by tapping into the concert venue's sound system.
• Bootlegs usually do not include the name or trademark of the performer's legitimate recording company. Recent amendments to the Copyright Act protect performers and recording artists exploited by the sale of bootleg sound recordings.
• It is now an infringement of copyright and unlawful for any person to make an unauthorized recording of a performer's performance and to distribute or sell copies of bootleg sound recordings imported into or manufactured in Canada after January 1, 1996.

Counterfeiting

• Counterfeiting is the unauthorized duplication not only of the sound recording but also of the graphics, including original artwork, logo, trademark and packaging of legitimate recordings. A counterfeit contains the same tracks as a legitimate release, however, the sound quality may be inferior.

Internet Piracy

Unauthorized use of sound recordings on the internet is a significant problem which has implications worldwide. Millions of unauthorized copies of sound recordings are available on music files that utilize a compression process known as MP3, which allows downloading and hence further unauthorized copying. In the last few years, sites that facilitate peer to peer (P2P) file-sharing have proliferated on the internet, resulting in hundreds of millions of dollars in lost revenues to artists and rights holders around the globe.

These P2P sites are depriving the recording artists, composers, authors and record companies of the right to choose the value of their creative property in a free and open market. Unauthorized downloading is also depriving governments of income from sales and excise taxes which would otherwise be paid for the sale of sound recordings on physical carriers such as CD's and tapes, which are displaced by down loading unauthorized copies from the internet.

CRIA is participating in a global response to internet piracy that is orchestrated by the International Federation of the Phonographic Industry (IFPI) along with the Recording Industry Association of America (RIAA), to identify and bring down websites hosting illegal copies of sound recordings in Canada and its international affiliates around the world. Initiatives have included communication with unauthorized file-sharers through instant messages, and the consideration of litigation against the most egregious unauthorized uploaders of copyrighted sound recordings.

CRIA takes action to secure evidence of infringement of copyright in sound recordings offered on the identified sites in Canada. Notification in writing is sent to the website operators, service providers or both, informing them of the infringing copies of sound recordings on the music files of the sites they host and the legal implications if they do not voluntarily cease and desist offering the infringing copies on these sites.

Additionally, the Canadian recording industry has rolled out a comprehensive educational campaign and has been instrumental in the development and promotion of legitimate online music sites, www.puretracks.com, www.archambaultzik.ca, and www.napster.com.

What We Do

CRIA maintains a full time anti-piracy unit under the direction of its in-house counsel and maintains close contact with its member companies. We conduct law enforcement education seminars, CD plant seminars, liaise with Customs officials and monitor the internet for online infringements. Regional investigators monitor the availability of suspected infringing sound recordings in the marketplace and make test purchases for further investigation.

If you suspect that infringing sound recordings are being offered for sale, please e-mail details to the CRIA anti-piracy unit. You may also telephone our anti-piracy hotline at 1-800-668-8820.