IFPI Chief Blasts Lack of Music Piracy Enforcement

LONDON -- “Digital piracy, and the lack of adequate legal tools to fight it, remains the biggest threat to the future of creative industries,” IFPI CEO Frances Moore told a news briefing Thursday for the release of the international recording industry’s annual Digital Music Report for 2011. “Legislation is only effective if it is enforced, and it hasn’t been enforced,” she said.

IFPI believes the “ISP telco is the best place to enforce, but there is a complete disconnect,” Moore said. “The telcos tell us to prosecute offenders, and then they won’t identify the offender’s IP address. So governments must push the telcos. It should be a win-win situation for the ISPs. We need their help to deal with piracy and we can help them develop new services and earn hundreds of millions in extra revenue."

The IFPI’s report said digital music revenue grew by an estimated 6 percent globally in 2010 to $4.6 billion. The report cites new services, such as Spotify, Vodafone Music and Deezer (in France), that are boosting the numbers, but also updates the “graduated response” sanctions that record companies are now beginning to enforce in some countries.

France led the way in 2007 with the Creation and Internet Law that warns infringers to come in compliance with EU copyright law. The first warning letters were sent in September 2010, and second-stage warnings are now going out, IFPI said. If they're ignored, a judge can order disconnection of the offenders’ broadband service, and the first such actions are expected this year, it said. South Korea passed a law in April 2009 and started sending out graduated response notices in March 2010, with 11 account suspensions since November, IFPI said. In the U.K., the Digital Economy Act became law in April. It requires ISPs to cooperate with rights holders in a system of notifications to infringing users, IFPI said. If this fails to reduce online copyright infringement by 70 percent or more, ISPs could be required to implement technical measures to stop persistent offenders, it said. No notices have been issued under the new law, it said.

Graduated response is ramping up in Ireland, with telco Eircom now sending the first notices to infringing users, IFPI said. If two warnings are ignored, the offender’s broadband is disconnected for seven days, later for 12 months, it said. Graduated response laws were enacted in Taiwan in July 2009 and Chile in May 2010, with New Zealand expected to pass a new law within weeks, it said.

Fragmented enforcement still exists in the recording industry, Max Hole, chief operating officer for Universal Music Group, and Thomas Hesse, Sony Music’s president of global music sales, said at Thursday’s briefing. “Every company must speak for itself,” said Hesse. “Spotify has license deals for most countries, but has not yet launched in some,” Hole said. “If there is total piracy in a country, there is no point in licensing services,” said Hesse. He hopes “ISPs will realize that unauthorised services are clogging their systems,” he said.

Enforcement “is not just about music,” said Hole. “It’s about films and everything online. The ISPs have been getting fat and we have not been getting a fair shake. But it does look as if things are now starting to roll,” he said. “It’s not just about disconnecting people or sanctions. They have to have somewhere to go. We can’t cling on to the past. Physical media won’t disappear as fast as some people think,” Hole continued. “We have to be light on our feet. In France, we now sell music with a bank. Customers get a Universal Music credit card that lets them buy concert tickets and downloads. Who would have envisaged that a few years ago? Kids don’t collect any more. They aren’t interested in owning. They want access. We have to move with the times."

Hesse said “music used to sell by word of mouth. We wanted to be first to discover new music. Now it’s done on Facebook, which is like word of mouth on steroids.” IFPI calls LimeWire the biggest source of infringing downloads in the U.S. Mininova, a major BitTorrent site, has shut down its illegal activities, IFPI said. Another site, the Pirate Bay, “was blocked by a court in Italy and its operators’ criminal convictions were upheld by the Court of Appeal in Sweden,” IFPI said. On Thursday, we found the Pirate Bay site still easy to search via Google.