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Piracy is the greatest threat facing the music industry today. IFPI and the international recording industry are responding proactively and aggressively to this US$4.3 billion worldwide problem.

Piracy is sometimes and mistakenly called a ‘victimless crime’.

The general term "piracy" refers to the illegal duplication and distribution of sound recordings and takes three specific forms: counterfeit, pirate and bootleg.

It is not. The economic losses due to piracy are enormous and are felt throughout the music value chain. The victims include the artists whose creativity gets no reward; governments who lose hundreds of millions of tax revenues; economies that are deprived of new investment; consumers who get less diversity and less choice; and record producers who are forced to reduce their artist rosters because it is impossible to compete against theft.
Piracy has been a problem for the music industry on a number of levels.

Ever since the Internet began saturating American culture, the number of pirated songs available has increasingly become a serious threat to the entire music industry, especially record labels and music stores. Advanced compression techniques (mp3 format) have been distributed across the Internet that enable high quality music to be freely available to anyone on the Internet.

Here are three reasons: First, the greatest victim of piracy is local culture. The international recording industry invests hundreds of millions of dollars – up to 15% of its turnover in some countries – in new talent. This investment has risen steadily over the last decade, and local repertoire accounts for nearly 70% of the global music market.
Second, piracy nurtures organized crime. Very often the money that is paid for pirate CDs will be channeled into the drugs trade, money laundering or other forms of serious organized criminal activity.

Third, piracy acts as a brake on investment, growth and jobs. In today’s global economy, intellectual property is a motor of economic growth.

Governments cannot permit this critical asset to be devalued by piracy. In the US alone, copyright industries in 2001 accounted for 5.2% of GDP, or US$535 billion dollars.

The pages of this report detail the continuing spread of music piracy worldwide, but there is positive news too. Governments are increasingly regulating their CD manufacturing plants; copyright laws worldwide are gradually improving, online and off-line; seizures of pirate product are sharply up, reflecting not only the problem but also the industry’s heightened response to it; and hundreds of millions of unauthorized music files have been removed from the internet.

We have made progress in the fight against piracy in 2001. There will be more progress in 2002. Ultimately, our industry’s efforts depend on governments recognizing that it is overwhelmingly in their interests, as well as that of the music industry, to join this fight.