Russia Seen Overtaking China in Music Piracy

By | June 5, 2003 at 12:00 AM

Russia is fast rising to the top of world music piracy charts with a counterfeit boom that could hit foreign investment and damage Moscow’s efforts to join the World Trade Organization, a leading watchdog said on Thursday.

The issue of intellectual property rights, an increasingly important component of U.S. trade policy, is a major obstacle to WTO accession for both Russia and neighboring Ukraine, where bootleg computer programs, music CDs and movie DVDs are rife.

In Russia alone the local pirated music market grew to $311 million last year, well above a legal music market of $257 million.

“Russia is becoming the world’s biggest exporter of pirated produce,” Igor Pozhitkov, regional head of the International Federation of Phonographic Industries (IFPI), told a news conference. Russia is currently the world’s second biggest producer of pirated music, behind China. Russian pirated CDs were confiscated in 24 countries last year.

David Munns, vice chairman of EMI Recorded Music Worldwide, said legal loopholes, inefficient legislation and poor enforcement kept record firms from getting any return on their investment in Russia.

“Outside Moscow and St Petersburg, there is no legitimate market at all,” Munns told the same news conference in Moscow, held after several days of industry talks with officials.

“Sadly, we are not able to invest in Russia because of the disastrous situation in the marketplace. The position here is really intolerable.”


In a country where the average wage is still just $140 and roughly a quarter of households live below the poverty line, officials have little hope of selling copyright CDs which cost around $15. A pirated CD costs around $4.

But Jay Berman, global chairman of copyright watchdog IFPI, said he hoped Moscow would start clamping down on dozens of plants producing illegal CDs across Russia.

“I shall be back here in September and I expect to see an improvement,” he said. “We’ve been promised action now.”

Prime Minister Mikhail Kasyanov has ordered the creation of a special commission to defend intellectual property rights. The commission is to present a plan to fight piracy by September.

“When we see some sign of the government doing something about it we shall start investing here,” EMI’s Munns said.

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