"The creative community finds itself at a very exciting moment as technological developments facilitate an ever-increasing diversity of products and services, as well as unprecedented opportunities to reach music fans globally in a user-friendly manner. Unfortunately, much of the potential of new technologies to drive expansion of music production and distribution, and the jobs that go with that, is undermined by extent of unfair competition in the online marketplace. Such unfair competition in the online market takes various forms, from market access restrictions which limit foreign investment or which apply onerous or discriminatory censorship regimes in places like China, Vietnam and a number of countries in the Middle East, to levels of piracy which force creators and their licensed partners to compete against unlicensed versions of their own creations. While all nations continue to struggle in one way or another with online piracy, there are nonetheless important distinctions to be made in how it has affected different markets, and how governments have responded to this challenge. In this report, we lay out many of those distinctions," said Neil Turkewitz, Executive Vice President, International.
Mr. Turkewitz said that in some markets, levels of piracy are so great that they essentially eclipse the output of the legitimate sector - naming China and Russia.
In the last year for which sales numbers are available (2011), the Russian music market contracted by 30% and had a total value of a mere $76 million - less than the value of the music market in Poland - notwithstanding the wide variety of authorized services available including mobile and internet platforms like Beeline, Deezer, iTunes, iviMusic, Megafon, mp3.ru, MTS, muz.ru, Nokia Music, Tele2, Yandex Music, Vevo and Zvooq.
Mr. Turkewitz said that much of this woeful performance is the consequence of the activities of a single internet company - vKontakte, previously identified by USTR as one of the world?s leading pirate marketplaces.
Similarly, the Chinese music market is in woeful shape as the result of runaway piracy and regulatory restrictions which complicate the operation of legitimate music platforms. In 2011, the value of China?s total market for recorded music was an abysmal $82.8 million. However, the Chinese music marketplace should be worth at least $1 billion.
"That is a lot of lost opportunity for U.S. and Chinese music communities alike, and we look to the Chinese government to rationalize its regulatory structure to remove unnecessary and discriminatory measures that complicate the operation of legitimate music platforms, and to take aggressive action against sites and individuals that continue to distribute infringing music," Mr. Turkewitz added.
In addition to China and Russia, the report identifies a large number of issues that limit U.S. commercial opportunities in a variety of countries - most notably Ukraine. Turkewitz said that legal and enforcement failures have caused IIPA to request that they be identified as a Priority Foreign Country and that their benefits under U.S. preferential trade programs (e.g. GSP) be removed.
"We hope that the Government of Ukraine takes prompt and effective action to address the various inadequacies identified in today?s report."