More muscle needed to fight CD pirates

With almost a billion illegal CDs sold last year alone, the industry's best attempts to stop the rot are proving ineffective

It's my belief that in every street in Britain, people are making illegal CDs," says David Martin, the director of anti-piracy at the British Phonographic Industry, a trade body for the music industry.

The statement may be dramatic, but there is no doubt that the use of computers to copy music illegally is on the increase, and more and more small-time criminals are then selling it on.

Last year the number of pirated CDs sold increased by 48 per cent to almost a billion, based on figures from the International Federation of the Phonographic Industry. The business now has a booming $4.3bn (£2.7bn) market, with none of the proceeds going back to the artist or band whose music is sold. And the figures quoted don't include the use of the internet and computer-generated CD "burning" by individuals for their own private use, which many believe is a more insidious problem.

As the issue is being blamed for the flattening out of music sales worldwide during the past five years, and in particular last year's drop in sales of 5 per cent to $33.7bn (£22.1bn), record companies are getting heavy. They have a trendy image but the corporate muscle behind them can be vicious and quick.

The most recent victim is Listen4ever.com, a file-swapping website based in China and therefore not subject to US copyright laws. It is now unavailable after the Record Industry Association of America sued internet service providers such as Cable & Wireless and WorldCom for allowing access to the site via their internet networks. The Association's writ stated that tracks by artists like Bruce Springsteen and the Red Hot Chili Peppers were being unlawfully distributed, and put the onus on the telecoms companies to stop the practice.

One of the previous casualties was Napster, the once phenomenally successful music file-sharing site, which has recently entered Chapter 11 bankruptcy after a long and bloody battle with the music companies.

But despite the best legal efforts, piracy is still blooming, and the problem is spreading from music to Hollywood and TV. Films can now be downloaded on the internet, for viewing on computers or for conversion into DVDs, while pirate copies of hit films like Harry Potter and The Lord of the Rings have become more common.

The problem of downloading is not as widespread here as in the music industry, because not as many people have computers that are fast enough to copy the larger files required – yet.

But Hollywood is sitting up and taking notice. "We are anxious, because we see what's happened to the music industry, which is being pillaged by piracy in the most horrendous way," says Jack Valenti, chairman and chief executive of the Motion Picture Association.

Fox Movies has persuaded some cinemas to broadcast a warning about downloading before films are screened, while the MPA is employing technology that roots out the sites online and will then issue a "cease and desist" order to the internet service providers.

But the internet is a hard medium to police. Despite legal enforcement by music companies, and the removal of 700 million unauthorised online music files last year, it is still as easy as ever to download material illegally.

The industry is a creative one, and experts are starting to think up increasingly novel methods of combating piracy. One of the latest guerrilla tactics is "spoofing". When they log on to file-sharing websites like Listen4ever, those who download music may find that, rather than getting a song for free, they get only 20 seconds of the music and then a hissing noise. Barenaked Ladies, the whimsical Canadian band, even went as far as to add a recorded message from the lead singer, asking the illicit downloader to go out and buy a copy of the track.

The industry has also succeeded in getting some governments on side. In the US, Senator Fritz Hollings is proposing a bill that would outlaw the sale of computers that do not have government-approved copyright protection technology imbedded within them. The European Commission has also published recommendations for more stringent control of digital copyright.

But legislative measures are often slow to take effect. "The problem is that most piracy takes advantage of the latest technology," says Ajax Scott, editor- in-chief of Music Week, a trade magazine. "Just when record companies think they have addressed it, a new form comes along ... the law always lags behind industry."

And sometimes when technology is used to foil technology, the effect is less than impressive. For example, when Sony tried to incorporate state-of-the-art anti-copying technology into Celine Dion's latest CD, A New Day Has Come, it was discovered that the effects could be bypassed by drawing around the outside of the disk with a black marker pen.

Some observers think the problem of falling music sales is integral to the industry and not caused simply by the activities of rogue techno heads. "There is an element of truth in the fact that some companies have been putting too much blame on CDR piracy," says Mr Scott.

One view is that the trend for tracks to be downloaded rather than purchased results from dissatisfaction with what is currently on offer in the music shops.

Sanctuary Group, a small London-listed music company that owns the rights to Iron Maiden and discovered the Strokes, says it has not been affected by internet piracy, because of the loyalty of its bands' fans.

"I don't think we should be scared that people get into Iron Maiden via a free route," says Mike Miller, finance director of Sanctuary. "Napster and similar websites are a problem to the majors, but less so to small independents. [The majors] need to get back to producing artists with a shelf life and developing long careers.

"Historically, you would have gone to buy the Kylie album because there are three decent tracks. The chances are that the other seven are pretty ordinary – but you would have bought the album anyway. Now, people burn their own versions."

Music companies may have to rethink the concept of the CD completely in order to stop the rot. "The only way to get around the problem is to make the legitimate product a more attractive option," says one leading music analyst, who declined to be named. "They need to be adding value, reducing the retail price and having a smaller amount of good quality content."

But if there is really a pirate on every street, any action the industry takes may be a case of shutting the stable door after the horse has bolted.