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EMI seen cutting funding to trade groups

British music industry major EMI wants to cut its funding to the industry’s trade bodies, a source familiar with the situation told Reuters on Wednesday, which could deal a blow to the fight against music piracy. The source said EMI, which was recently taken over by private equity group Terra Firma, was looking at ways to “substantially” reduce the amount it pays trade groups.

The groups, the International Federation of the Phonographic Industry (IFPI), the Recording Industry Association of America (RIAA) and other national associations, represent music companies and the fight against illegal piracy.

They receive funding from the four major music groups — EMI, Warner, Sony BMG and Universal — and hundreds of small independent labels.

The IFPI said it believed the four majors give approximately 64 million pounds ($132.1 million) each year to itself, the RIAA and many other national associations.

The other majors were not available for comment, but a separate industry source said at least one of the major music companies is known to strongly support the associations and their work.

EMI is undergoing a strategic review after being bought by Terra Firma for 2.4 billion pounds ($4.95 billion).

Like all music groups, it has been hit hard by online piracy and falling CD sales, despite the efforts of the trade groups to combat the problem.

The IFPI said on Wednesday it was engaged in annual budget decisions and “as one would expect in this market, there is a focus on efficiencies and savings.”

It declined to give any further details but added that it was also engaged in a very full agenda to promote the rights of its member record companies.

EMI, Terra Firma, the BPI and RIAA were all unavailable to comment.

Illegal file-sharing is estimated to cost the music industry billions of dollars a year in revenues. In response, the trade bodies have launched legal action and called upon Internet service providers to block the activity.

Analysts at UBS said any move to reduce the funding to trade bodies could hamper the industry’s efforts to fight piracy and protect music copyright.

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