Moscow Times

Thursday, May. 16, 2002.
Page 7

Top Record Execs Target Local Pirates
By Alex Nicholson
Staff Writer

Top executives from the world's largest record companies united with leading Russian labels Wednesday in a concerted effort to squelch the flow of millions of dollars' worth of booty every year to compact disc pirates.

"Russia should confront piracy for Russians and the Russian economy. They should do it for Russia and not for anyone else," said John Kennedy, president of the world's No.1 record company, Universal Music, at a press conference in Moscow on Wednesday marking the formation of the first local music association to bring together local and international record companies.

The National Federation of Phonogram Producers, formed to promote legislative change and stricter enforcement of copyright law, will incorporate 10 companies and accounts for more than 70 percent of the local record industry.

The creation of the body is seen as a positive move by intellectual property experts.

"Any effort to bind local and international IP owners is a step in the right direction," said Peter Necarsulmer, president and CEO of the Coalition for Intellectual Property Rights.

Substandard copyright law and flabby enforcement measures permitted pirates to suck an estimated $240 million from Russia last year, said Igor Pozhitkov, regional director of the International Federation for the Phonographic Industry's Russia and CIS office.

In a market that shows huge potential with 17 percent growth last year to reach $223 million in music sales, the "rampant" piracy situation is strangling local talent, Kennedy said.

He was joined in his appeal by 1990s pop heartthrob Dmitry Malikov, who said the situation for new acts in Russia was lamentable. Without the support of a developed music industry, artists spend more time trying to scrape together a living than actually producing new music, he said.

"I personally prefer working in the studio," said the singer. "I'm lucky I've been in the business for 12 years. So I'm reasonably well-off. Other artists don't get the chance to go the distance."

The right legal support as well as changes to the criminal procedure would guarantee jobs, overseas revenues and big tax revenues, Kennedy said. More than 600,000 people are employed in the music business in the European Union, he said, while Britain alone reaped $300 million in tax from the music industry last year. Control would also rein in organized crime conglomerates he said.

Eighteen CD plants with a capacity of 200 million discs are currently operating in Russia, fueling piracy on the local market where legitimate demand accounts for only 12 million units sold, Pozhitkov said. Successful measures taken to limit CD production in Bulgaria and Ukraine had boosted pirate production in Russia as manufacturers simply moved across the border.

While 12 million legitimate CDs, which sell for a maximum of $17, were sold last year in Russia, sales of counterfeits, which cost $3 each, clocked in at 42 million, of which 39 million were of foreign artists, said Pozhitkov.

"We come an honorable No. 2 after China," he said.

Kennedy was quick to stress that the record companies' interest in the potentially promising Russian music market was not just out of self-interest.

"Even to the extent that there are multinationals working in Russia today who would love to sell you everything from the Beatles to Madonna and everything else, the fact is that the marketplace dictates that local Russian music dominates. Therefore Russian music suffers," said IFPI chairman Jay Berman.