Introduction
In the
wake of the aggressive campaign against Napster, in the name of intellectual
property rights, the record industry, more precisely the Big 5 labels
(BMG, Warner, Universal, Sony, EMI), along with the IFPI (International
Federation of the Phonograph Industry), National Academy for the Recording
Arts and Sciences (NARAS), Latin Academy of Recording Arts and Sciences
(LARAS), and the Recording Industry Association of America (RIAA) are
on the attack worldwide against CD pirates. The IFPI estimates that
in the year 2000 one in every three CDs purchased throughout the world
was pirated (IFPI 2001). That adds up to over 1.8 billion units! If
this were not such a serious issue their position might be laughable
as the record industry uses the media to cry foul and plead for public
support after years of raking artists over the financial coals. Just
last year the major labels were cited for using pressure tactics against
music retailers to keep the cost of CDs higher than necessary. The Federal
Trade Commission ruled that the record companies have violated fair
trade practices by intimidating store owners into not advertising CDs
below a certain price leading to antitrust suits being filed by twenty-eight
of the fifty United States against the Big 5. These practices have added
over 500 million dollars to CD prices since 1997!
In 2001,
after an article in the Los Angeles Times shed light on an all but forgotten
tactic used by the industry to control airplay, payola, yet another
example of their unfair and unethical trade practices was revealed to
the public. Subsequently, the Federal Communications Commission and
the Justice Department launched an in depth investigation into the allegations
of payola between the independent promoters of the music and the radio
stations. The list goes on and on. With such a history of unfairness
and one-sided contract negotiations with artists, greed, the lust for
power, price gouging and price fixing, the Industry has worked hard
to earn its unfavorable reputation.
Now let us consider this coercive industry in control of a universal
entity, such as a global music market, with fixed pricing structures
applied unilaterally across the board. This raises some complicated
issues of how the concept is applied across a variety of nations all
with extremely differing economic, cultural and social realities. With
the United States holding the lion's share of the world music market
at 37% (IFPI 2000), they have assumed the position of enforcing policies
and standards that in many countries are economically unrealistic. The
unilateral imposition of these standards upon nations throughout the
world is no less than a form of neocolonialism and economic oppression.
Unfair price fixing and unilateral policies cause financial hardships
for members of the under classes wishing to consume the product.
In Latin
America, where music holds such an intrinsic role in cultural expression,
purchasing the product at suggested list price is simply impossible
for the majority. The idea of a global music market is not a new concept.
The international music market has existed for nearly a century. And
the record industry has always held control of production and distribution.
The world's music consumers were simply forced to pay whatever price
was place on the product. With the emergence of the cassette recorder
in the 1970s and CD technology in the 1980s the playing field began
to change. By the mid 1990s CD technology had advanced to the point
where CD burners were coming as standard equipment in personal computers
and standalone duplicators were in every stereo store. For the first
time in the history of the music industry consumers could now actually
dabble in production. And through Internet file sharing applications,
the consumer can now also achieve a certain amount of distribution that
previous was unavailable. With this shifting terrain the record industry
began to feel its strangle hold on consumer music habits being threatened.
So, using the defense of intellectual property rights as their battle
flag, IFPI, NARAS, LARAS and the RIAA have all banded together to "stamp
out" music piracy on a global level. Thus far they have been successful
in getting the Clinton Administration to issue laws covering the new
media of Internet music (No Electronic Theft Act, NET; Digital Millenium
Copyright Act), and other laws that are falling in favor of major record
labels and their traditional distribution conglomerates. They are currently
seeking the administration to apply political and perhaps economic pressure
if necessary on nations where piracy is rampant. From an ethnomusicological
perspective, this inter-cultural dynamic raises some very interesting
issues of power structures, ethics, and the relation between greed and
poverty. As a preview of a larger project currently underway, this study
presents a brief examination of this dynamic between the United States,
Mexico, and Brazil, and strives to draw closer to the definitive answer
to the question, "Who are the pirates?"
What's
Wrong with this Picture?
In a wash
of articles surfacing recently in the newspapers of the world, and publications
by the IFPI, record companies are crying foul and posing as normally
benevolent companies falling victim to a technologically changing world.
They complain about the increased sale of CD burners, and the quantity
of CD-Rs in circulation, but receive a two dollar surcharge from each
CD burner sold and a 2% surcharge from the sale of each CD-R. In 1994,
these surcharges exceeded 34 million dollars, and EVERY artist with
whom I spoke never received any payments from these fees. The industry
argues for the protection of their artists' intellectual property rights,
rights that they control, and in most cases have been wrested away from
their rightful owner, the artist. While the world waits to see if Bertlesmann
(BMG) will ever actually distribute any of the twenty million dollars
it was awarded in a settlement with Napster, in a guest column on the
NARAS website, posted by Miles Copeland, he gives a pathetic plea for
a reassessment of the public image of the record industry. Citing a
per CD cost of $15 against a wholesale selling price of $10 Copeland
paints the record industry as having been unfairly labeled greedy (N.A.R.A.S.
2001). From a purely business perspective, anyone running a record label
that consistently loses $5.00 per CD should most likely consider a career
change. But, it doesn't stop there.
In his
open letter to the public, titled "Building Bridges with Music"
in the premier issue of Grammy Latino (1997), the L.A.R.A.S. Magazine,
then N.A.R.A.S. CEO and President Michael Greene claimed that piracy
accounts for 50% of all music purchases made in Latin America. While
piracy is certainly rampant in Latin America, his figure of 50% lacks
empirical evidence and remains an exaggerated estimate meant to reflect
favorably upon an industry that is painting itself as "victimized"
by criminals. He bases his figures on the imaginary figures provided
annually by the IFPI. He continued by claiming, "the entire music
food chain is starved" as the foreign bandits reap the benefits
of piracy (p. 24). How ridiculous is such a statement coming from a
man who, on the periphery of the industry, annually receives an income
of nearly two million dollars as the head of a NON-PROFIT organization?
(When he was dismissed of his duties in 2002, he took with him an EIGHT
million dollar parting gift!! It is overt mistruths, like this and like
Copeland's, that have earned the recording industry its image as a ravenous,
heartless vampire. Greene called for solutions to piracy that "must
be tailored to the very specific, yet fluid political and economic environments
existing in each country" (p.24). By this, he was not referring
to tailoring the price structure, but to tailoring the means of coercion.
In March 2001, they were successful in coercing the Brazilian government
into a Presidential Decree instituting an "Interministerial"
Anti-Piracy Committee, under the Ministry of Justice, aimed at coordinating
the country's different enforcement agencies (IFPI 2001). In his infinite
naivety, Greene goes on to dismiss the existence of a strong middle
class in Latin America (an embarrassment in itself for the then President
of L.A.R.A.S.) and cited the disparity of income between the classes
as the principle problem for piracy. He is not far off, but at no point
does he acknowledge that this class dynamic has been constructed deliberately,
on a global level, by the World's wealthy, a class of which he is part,
as a means of maintaining power and control.
In the
case of Brazil, Greene claims that pirated recordings account for 45%
of all sales, and in Colombia the estimate of pirated sales has reached
an astonishing 86 percent (p. 25). Once again, no written records support
these percentages aside from the estimated numbers provided by the IFPI.
He concluded the letter with a call to every citizen in "even the
smallest communities" to join in the battle against piracy. In
an exuberant display of self-importance, he is essentially requesting
that every man, woman, and child on Earth, despite their economic reality,
expend their energy and effort to insure the continuity of his luxurious
lifestyle. That is what is truly at stake. He cites disparity of wealth
and inconsistent enforcement of copyright laws by officials as the main
contributors to the situation. Nowhere in his letter does he admit that
record executives and publishers are highly overpaid members of an exploitative
industry that has historically appropriated the intellectual properties
of others and has parlayed them into a vehicle to satisfy their greed
and the need for power. At no time does Greene admit that perhaps the
prices being charged for commercial CDs, which are considered inflated
by U.S. standards, are entirely unrealistic given local economies throughout
Latin America. Never does he even consider the high cost of the products
as a possible reason for piracy. As a case study let us consider Brazil.
Piracy
myths and truths
In his
article, "In the Land of Sun and Music, CD Pirates Play Robin Hood"
appearing in the New York Times May 20, 2001, Larry Rother paints a
very different picture of the situation. "The latest releases of
Britney Spears, Madonna, U2 or the Back Street Boys can cost up to R$36.25
(Reais)(US$14.50) in record shops here, but that doesn't stop anyone
from hearing them. Street vendors, operating from simple metal stands,
offer the same titles for R$6.80 ($2.75)" (Rother 2001). This phenomenon
is not restricted to imported music. The latest releases by the national
artists sell for the same price averaging R$30. In a nation where the
monthly minimum wage is R$140-200 (US$70-100), paying R$36 for a CD
is absolutely out of the question. "It is the avarice, the unyielding
rapaciousness of the record companies that foments the violation of
recording copyrights in Brazil," said Nehemias Gueiros Jr., an
intellectual property rights lawyer and former record company executive.
"When you have a predatory price policy incompatible with the economic
reality of a country, then you are simply paving the way for piracy."
In regard to the high prices, Antônio Carlos Manfredini, an economist
at the Getúlio Vargas Foundation said, "The higher price
for recordings here [Brazil] is maintained not so much with Brazil itself
in mind, but to avoid sales to the United States and Western Europe,
it's simply not worth it to them to threaten their markets in the North
by means of aggressive pricing in Brazil."
This statement
reveals Brazil's reality of trying to deal with the globalized price
structure imposed on the world by the U.S./European music industry.
As a result of these high prices, record company profit margins in Brazil
may be even higher than they are in the United States. Mr. Gueiros,
an ex-executive at Sony and BMG before opening his own law firm and
boutique record label in Rio de Janeiro, calculates that the average
producer's cost of a CD in Brazil, which includes royalties are kept
lower than in the United States at less than $3 (Rother 2001). It is
commonly accepted by Brazilian economists and industry forecasters,
that profits in Brazil would soar, and piracy would wane, if record
companies would trade profit per unit for volume sales. In rebuttal
to Greene's accusation that local officials are not doing enough Manfredini
states, "In a low-income country, the regulatory authorities have
difficulty protecting the rights of both producers and consumers, and
so there is not an institutional structure to control price fixing and
other abuses perpetrated by the same companies that complain that their
rights are not being protected when piracy results" (Rother 2001).
This is an interesting statement that reveals the greed of an industry
that wants protection for its price gouging and protection from opposition
to that gouging. So, in other words, what the industry wants is for
governments to oppress the masses in order to preserve their economic
pillaging of the lower classes. The painfully obvious truth that seems
difficult for the industry to grasp is that in "low-income"
societies throughout the world, music pirates are not seen as the bandits
Michael Greene and the industry claim them to be. They are, in many
cases, Robin Hoods freeing music from its economic raptors and returning
it to the people. This is, after all, a country that defines and expresses
itself through song as much as any other in the world, which means that
Brazilians view any attempt to economically limit access to music as
an attack on their culture and national identity.
Mexican
Pirates
In another case study let us consider Mexico. The IFPI has released
figures in its June 2001 update which state that pirated CDs account
for over 65% of all music purchases made in the country during the year
2000. They cite that due to "poor coordination between the key
enforcement agencies, a lack of commitment to intellectual property
offenses by the judiciary and a lack of deterrent sentencing in the
courts," (IFPI 2001) piracy continues to grow. Comparing the Mexican
gross national product per capita of $4,748 with the $33,933 of the
United States (IFPI 2001) illuminates in dollars and sense the
disparity between the social classes of each country. The difference
of $29,185 makes selling the same product for the same price in both
societies an absurdity. The case of Brazil is even worse with the difference
being $30,496. Third on the list of priorities against piracy, the IFPI
claims that Mexican pirates account for annual losses of more than 220
million dollars. What is ironic is that upon closer inspection, Mexico
is posting a real growth rate in retail sales of 13% compared to that
of 6% in the United States and to Brazil's depressing -44%. Units sold
in Mexico during 1999 reached 72.8 million for an annual take of $626
million dollars. When combining these figures with the $668.4 million
from Brazil, we see that the record industry reaped $1,294,400,000 last
year from these two Latin American countries that surprisingly still
occupy the third and fourth place on the IFPI's hitlist against piracy.
The IFPI has stated that their top priority in Mexico is effective anti-piracy
enforcement. What this actually means has yet to be seen. As in the
case of Brazil this so-called lack of commitment seems to evidence an
unwillingness to be coerced by multinational corporations into enforcing
policies that are designed as mechanisms to economically pillage the
under classes of their country. Mexico is no less musical than Brazil
and limiting access to music to those who can pay the price is the same
attack on Mexican culture and national identity.
Final
Thoughts
Citing the 80% increase in the sale of CD-R blanks in 2000 as the main
reason for the increase in piracy, the IFPI has not been as forthcoming
with figures on the amount of money raised from the 2% surcharge that
trickles back to the industry from those CD-Rs, nor the two dollar surcharge
made from every burner that made the copies. Imagine the revenue generated
if the sales of CD-Rs are up 80% and in 1994 they gleaned 34 million!
Yet, no distributions are made to the musicians of the member labels
of the R.I.A.A. The interesting thing here is, that those surcharges
are being paid to the R.I.A.A. to offset any projected loss in retail
sales due to copies being made by consumers. This was intended to free
the listener from these problems. What happened to that agreement? One
more note, if piracy is eradicated, will the R.I.A.A. stop receiving
the surcharges? I doubt it. One thing inherently wrong with the figures
thrown around by the industry is that nowhere has it been proven that
every CD-R sold is being turned into a pirated product. The main issue
here is not the quantity of CD-Rs in circulation, but the reason why
so many are. Apparently the world's music consumer has found an option
to the price gouging of the industry. The CD-R offers a previously unavailable
choice, a response to the economic oppression perpetrated against them
by the world's wealthy. To the "low income" societies throughout
Brazil and Mexico, and even the United States, the CD-R represents liberation
and freedom of choice. Therefore, it is not necessary to be an economist
to see that if we abandon the mind washing we received while growing
up that taught us that the normal order of society was for a small faction
of the population to control the majority of resources, and for the
masses to struggle to obtain them, AND we apply a TRICKLE UP rather
than a trickle down theory, it becomes quite clear who the pirates actually
are.
Greene,
Michael. 1997. "Building Bridges with Music." In Grammy Latino
1(1): 22-25.
IFPI. 2000. The Recording Industry in Numbers 2000. London: IFPI
IFPI. 2001. The Recording Industry in Numbers June 2001. London: IFPI
National Academy of the Recording Arts and Sciences. (N.A.R.A.S.) 2001.
<http://www.grammy.com>
R.I.A.A. 2001. <http://www.riaa.com/>
Rother,
Larry. 2001. "In the Land of Sun and Music Pirates Play Robin Hood."
New York Times May, 20.
What
Can We Do?
1) Stop
buying new CDs from any of the major labels and their affiliated
labels
2) Do buy used CDs at your local stores and online
3) Continue to
rip MP3s and trade them freely with your friends
4) Support your local musicians by going to their performances
and buying their CDs
5) Report any corrupted
CDs / What
are corrupted CDs?
5) Write to the R.I.A.A.
and let them know you are no longer going to support their members
6) Contact
your State representative
and let them know you want to be able to access music you already own
anywhere, anytime.
7) Contact
your Senator
and let them know the same
Read
about the recent decision against the R.I.A.A. and their pirating tactics
Here