Crackdown on pounds 6bn CD pirates

THOUSANDS OF people will today buy CDs and videos at knock-down prices, and most will know that they are counterfeits. At market stalls and car boot sales throughout the country they will take the opportunity to "snap up a bargain".

Everyone knows it goes on but what isn't known is just how much the public's love affair with the black economy is costing the taxpayer. Figures obtained by the Independent on Sunday show that the counterfeiters are depriving business of pounds 6.42bn a year, the equivalent of pounds 1.08bn tax. That would fund a half penny cut in income tax or pay for free universal eye and dental check-ups.

The figures, currently being studied by Chris Smith, the Culture Secretary, have been produced by the music, audio-visual, retail and computer software industries which have just joined forces to lobby as the Alliance against Counterfeiting and Piracy. Mr Smith is determined to convince the public that by buying counterfeit goods they are ripping off not only artists but also themselves.

Details of the scale of the damage caused by the pirates comes two months before an expert committee examining intellectual property rights is due to make recommendations for action to the Government.

The committee is part of the Department for Culture's Creative Industries Task Force, which includes Richard Branson, the designer Paul Smith, the record company boss Alan McGee, and Treasury and Trade and Industry ministers.

At the heart of its thinking is a move to make consumers realise the effect on artists when their ideas are ripped off. Even schoolchildren are to be taught the real and increasing value of ideas - intellectual property - in the economy.

The task force is also examining how the pirates can be combated by making it easier to acquire copyright protection. The Chancellor has already announced a simpler process for taking out a patent.

Mr Smith said yesterday that the Government was committed to the fight against counterfeiting, but the public needed to play its part. "If we are to tackle these problems effectively, we must strengthen respect for the rights of people who actually produce music, films and the other creative industries as well as ensuring we have effective penalties in place," he said.

The Culture Secretary raised the problems this spring on a visit to the Far East and China, one of the biggest sources of counterfeit music worldwide. He told the Chinese that the illegal trade was flourishing, but that they could benefit from a thriving music industry. A Chinese delegation will now visit the UK this September for discussions with the British music industry.

Yet while the Government is keen to move towards a more "positive" approach to the problem, the industry wants straightforward, tougher penalties.

Lavinia Carey, chair of the Alliance against Counterfeiting and Piracy, said the Government had to take the theft of ideas as seriously as the theft of property. Copyright infringements carry a maximum penalty of two years' imprisonment compared with seven years for property theft. The alliance is preparing a private member's bill to close loopholes in the existing legislation.

Mrs Carey added: "Not only does trade in counterfeit products deliver poor quality and dangerous goods to consumers, it also provides a vehicle for organised crime."

But Paul Renney, partner in the entertainment division of City lawyers Theodore Goddard, said technological advances, such as downloading music from the internet, were outpacing the law. "The music industry isn't waiting for the law to catch up," he said.

While Europe is producing contradictory directives on intellectual property, the music industry has already embarked on developing systems of encryption to defeat the pirates. Today's counterfeits of CDs, videos and computer software are normally hi-tech copies of the originals.

"The technology these days means you don't need much experience, just a bit of expertise to combat the security methods," said one police source.

Raids by Strathclyde police on Glasgow's Barras Market and Maryhill areas last November netted pounds 8m worth of counterfeit goods and copying equipment. Among them was computer software selling for pounds 15 or pounds 20 which included applications worth pounds 4,000.

Yet John Anderson, executive secretary of the Anti-Counterfeiting Group which represents a number of big businesses, said it was generally easy to spot fakes.

"The most obvious way is to look around you when you're buying it. If you're buying from a market stall or a car boot or a shifty-looking high street discount store, you are 99.9 per cent certain of buying a fake."

A record industry insider said that the quality of the art work was a good indicator of whether CDs were being copied.

She echoed Mr Anderson's advice on where to buy. "In any of the major record stores, what you're getting is kosher. If someone is selling it out of a suitcase it probably isn't. I suspect that people buy counterfeit CDs in the full knowledge that they're not the real thing."

YOUR GUIDE TO COUNTERFEITS

How to make one...

YOU can churn out 32 copies of a CD an hour using special equipment.

But the most up-to-date method is to simply download music from the internet. Users can browse by type of music, artist or song title and then download tracks into a digital format.

How to spot one...

n They're much cheaper

n The recording can have a hissing sound in the background.

n No expansive sleeve notes, just one piece of card.

n Poorly reproduced art work.

n No mention of the record company.

Where to spot one...

Be on your guard when you are tempted to buy from market stalls or car boot sales. Rip-off CDs are also to be found in dodgy discount record shops.

Counterfeiters' favourite artists...

n Robbie Williams

n Spice Girls

n Boyzone

n Abba

n Texas

IT'S A RIP-OFF

JOHN PEEL

How could you tell if a CD was fake anyway? I can't imagine circumstances where I'd ever buy one because I buy most of my CDs at HMV Oxford Street.

I've bought one or two bootlegs over the years from festivals, mainly recordings you couldn't otherwise get, but apart from that I wouldn't buy them.

I see it as forgery, it's not justified to rip the artist off. I would be opposed to it especially for those artists operating on a small scale. I can't see the major acts like Elton John suffering from something like this but it could bring smaller artists, to their knees.

DOMENIC HANWAY

Manager of CDs, HMV, Oxford Street, London: The majority of pressing plants used to be in Russia, now they've moved to the Ukraine and the European market is flooded with them.

To what extent it affects us - the larger music stores - is very difficult to measure. All I know is that whatever happens the problem will never be eradicated. If you go to the markets on a Sunday morning, you'll see tons of them there. The public appreciate the price but in the long term they do worse out of it because the quality isn't the same. And in terms of customer service, if the CD is faulty you can't bring it back.

JANICE LONG

DJ for GLR: I don't think I've ever bought a counterfeit CD and I wouldn't really know how to spot one. I think it's a good idea that the Government are trying to clamp down on this problem because it's detrimental to musicians. It's a direct rip-off that's affecting every aspect of the music industry. It's something that should stop because it puts people's livelihoods and jobs at stake.

NICK BARBER

Independent on Sunday music critic: I've never bought a counterfeit CD to my knowledge but they're easy enough to spot - the cover often doesn't have the name of the record company on it and the sleeve looks different to the original.

Music is one of the biggest exports in our country - it's a gigantic business - so it makes sense the government want to try and clamp down on counterfeit CDs.