Why enlargement poses a huge financial threat to Europe’s music producers

Date: 04/05/05

The circulation of pirated CDs and DVDs is set to worsen in the EU now that the enlarged Union touches some of the worst offenders in the region, music producers have warned.

A delegation from EU music industry association IFPI will travel to Ukraine later this month to highlight the issue, coinciding with the Eurovision song contest that will be held there on 21 May.

Ukraine, Bulgaria, Russia and Romania all have piracy levels for international music and running above 50% of the total market in those countries.

Piracy is found not only in CD plants, which may be running off illegal copies alongside more legitimate ones, but also in factories where people use CD burners to produce thousands of pirated copies. Advancing technology means that it is now possible to burn a 74-minute CD in just three minutes.

In Bulgaria and the Ukraine, the piracy level for European music totals 65% and 75% respectively and is estimated to cost the industry around €100 million. In Western Europe the level is generally below 10% and in the UK is only around 2% - 3%.

Now that the neighbouring countries of these areas are part of the EU, once they cross the border, illegal CDs and DVDs can be freely moved around the member states, warns Stefan Krawczyk, deputy director at IFPI.

"Frankly we are underwhelmed by the potential of border customs in the new member states to tackle external borders," he says.

'Transhipment' countries - established routes from outside the EU inside the member states - have existed since before enlargement, says Krawczyk. Pirated goods from Belarus and Russia travel easily through Lithuania and from the Ukraine through Slovakia and, to a lesser extent, Hungary.

Around 1,000 suitcase traders pass through Poland's extensive border with Belarus, Lithuania and Ukraine every day, although according to Krawczyk the government is "doing its best" to deal with the situation.

European Commission figures released in February show that the number of CDs (including games, software and DVDs) seized at the EU's external borders rose 172% between 2002 and 2003.

A spokesman for tax and customs commissioner László Kovács said that enforcement of borders is the responsibility of the member states.

But the Commission is to present a proposal in the autumn to overhaul the EU Customs Code, reducing the number of procedures, making it easier to keep track of goods and making authorisation valid throughout all member states. It would also bring all member states' electronic systems in line with one another for better communication.

IFPI also hopes to meet the Ukraine president and the EU ambassador in the country to encourage them to crack down on pirates.

The association is pushing for Ukraine's negotiations to become a member of the World Trade Organization to depend on their enforcement of copyright law. It has also asked the Commission to refuse approval of Bulgaria's accession unless the government ensures the same.

"It's a misconception that copyright protection is an issue for the US music industry," Krawczyk says. "Some of the biggest music producers like EMI, BMG (Sony) and Universal are all European."

The campaign is being supported by performers, including last year's Eurovision winner Ruslana, who said, "I call on President [Viktor] Yuschenko and his new government to take strong measures to truly protect musicians and the record labels that support them against copyright crime. Only like this can we hope to one day be part of the European Union".

It is not just accession or future EU members that have a problem. The Baltic states also have a particularly bad record in music piracy. Lithuania is the worst in the class, with pirate music accounting for around 80% of the overall market, followed by Latvia (70%) and Estonia (60%).

Levels in the other new members, the Czech Republic, Hungary and Poland, r

Article reports on massive increases in pirated CDs and DVDs originating from the enlarged EU's new eastern neighbours.