There are two types of fake CD-Roms on the market - those produced in pressing plants, which can be difficult to tell from the real thing, and those made on a CD recorder (CD-R).
Until 18 months ago, CD-R machines cost several thousand pounds. Now you can buy one for pounds 700 and blank discs are as little as pounds 3.50 each if purchased in bulk.
"It's very easy to copy a CD on a CD-R," says Mr Loader. "Price has been the controller and that has now gone. Three years ago, there was only one CD-R pirate. Today, every street-corner bootleg operator has access to a CD-R."
An even bigger problem is CDs produced in real CD-pressing plants. Most counterfeit discs are manufactured in plants in China, Taiwan, Hong Kong, other Far East countries and in former Iron Curtain countries. In the past year, plants in Western Europe have also been found making illegal copies. The profits on the counterfeiting are so great that organised crime is involved. In China, the International Federation of the Phonographic Industry, which looks after the interest of the audio CD companies, had to withdraw its inspectors from Guangdong province in China because of death threats.
Software companies are at last experimenting with ways to stop counterfeiting. The disc manufacturer Nimbus has a patented system for putting holograms on CDs. ELSPA and other industry bodies are keen to see the system adopted, but there is resistance. Not only will it be expensive to implement, but other disc manufacturers are less than happy to adopt a technology developed by a rival.
Only Microsoft seems to have tackled the problem. Last year, it persuaded the US government to make CD piracy a focus of its trade policy with China. It has also sponsored a Sherlock Holmes piracy hotline (0345 300125), it is investigating putting holograms on disk and it provides "certificates of authenticity" with all CD-Rom software. The certificates include a label that turns into a hologram under ultraviolet light that has so far proved uncopyable.
"If you buy one of our CD-Roms and don't have a certificate of authenticity in the box, you can be pretty sure you have been defrauded," says Mark Roberts, software theft programme manager at Microsoft. Much of the trouble comes in the shape of bogus wholesalers. "Resellers who think they are being offered dubious goods should contact us," he says. "If they are offered Encarta at half the recommended retail price, they should be careful. We will go after and prosecute anyone we find defrauding our customers."
Dave Wilson, marketing manager for PDO, the UK's largest presser of CDs, says the company has been approached by pirates but has avoided being trapped through careful checking. He finds it difficult to understand why the industry is being so slow to protect itself. "When holograms were introduced into the video software industry, they really helped to control piracy," he says. "I am amazed that nobody else has picked up on holograms the way Microsoft has."