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Record Industry Wants Small Shops to Clean House

Dozens of small stores have been given two weeks to clear their racks of pirated CDs, tell where they got them and pay damages to the five largest record labels, an industry group said on Monday.

The Recording Industry Association of America said 78 small retailers across the U.S. – mostly gas stations and convenience and grocery stores – received the demands after investigators purchased pirated CDs at their stores.

Retailers who refuse to comply could face civil penalties of up to $150,000 per title, according to a letter sent to them by the RIAA. The pirated merchandise would have to be turned in to the industry group, whose members estimate that they lose $300 million domestically each year to counterfeit CD burning.

In the letter, the industry group reminded store owners that they are violating the copyrights of the material.

RIAA sent undercover shoppers to hundreds of U.S. record stores, turning up bootleg material in Chicago, New York, Los Angeles, Texas and Florida.

“This new initiative should serve as a clarion call for retail outlets of all shapes and sizes that we take music piracy seriously, and they need to get their house in order,” said RIAA Chairman Hilary Rosen.

An RIAA official declined to say how much each store was being asked to pay. Most of the pirated discs were hip hop, R&B and Latin music, the official said.

The RIAA represents AOL Time Warner, EMI Group Plc, Sony Corp.., Vivendi Universal, and Bertelsmann AG.

Global music sales fell 9 percent in the first half of 2002, and sales during the crucial holiday season this year have been slower than hoped. The music industry blames widespread CD copying and Internet downloading for some of the decline.

The industry’s battle with popular Internet-based networks such as Napster and Kazaa has dominated headlines, but physical piracy of CDs and cassettes accounts for two out of every five units sold worldwide, according to the International Federation of the Phonographic Industry.

While physical piracy in the United States is not as prevalent as it is overseas according to IFPI figures, bootleggers have gained a foothold as CD burners have become smaller and less expensive, the RIAA said.

Last week in New York, U.S. Secret Service agents seized 35,000 pirated CDs, 10,000 DVDs and the equivalent of 421 CD burners in the largest-ever bust in the U.S. The operation had the potential to cost the industry $90 million annually, the RIAA said.

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