The International Federation of the Phonographic Industry (IFPI), a lobbying group, said pirated disc sales jumped from 640 million units in 2000 to 950 million units in 2001.
However, declining prices kept the total value of the unauthorized CD market nearly flat, at an estimated $4.3 billion worldwide in 2001 compared with $4.2 billion the previous year. Because those numbers use the prices for pirated discs and not legal prices, they do not measure the full economic loss to recording industry, the IFPI said. In addition, they do not include the value of music traded online over free file-swapping services.
The IFPI attributed the proliferation of illegal music to organized CD-R (CD-recordable discs) piracy. It said illegal production is roughly split between large-scale manufacturing plants and small garages and laboratories. The group added that the widespread availability of cheap disc-replication equipment, the prevalence of high-speed burners, and a drop in blank CD-R prices are fueling the growth of CD-R piracy in countries including the United States.
According to the IFPI, 2.8 million pirated CD-R discs were seized in the United States last year, compared with 1.6 million in 2000.
Moreover, the IFPI said various online peer-to-peer services have encouraged the widespread unauthorized copying of music. The IFPI said the Web is being used to sell counterfeit, unauthorized compilation and other physical pirated products. The IFPI estimated that in May 2002, there were approximately 3 million people and 500 million files available for copying at any one time on all of the peer-to-peer services worldwide.
The report comes as the recording industry increases its enforcement efforts, including lobbying for federal anti-piracy. In addition, the industry has filed lawsuits targeting peer-to-peer file-swapping services including Audiogalaxy and the distributors of Morpheus, Kazaa and Grokster. A suit against Napster was put on hold after the company filed for bankruptcy protection.
The IFPI said that last year it and its affiliated national groups removed from the Internet approximately 1,060 unauthorized peer-to-peer music servers, 28,000 Web and FTP (file transfer protocol) sites offering pirated music, 2.8 million people using unauthorized peer-to-peer services, and 700 million unauthorized music files in 51 countries.
The group added that the global market for pirated music--including discs and cassettes-- totaled 1.9 billion recordings in 2001, compared with 1.8 billion in 2000. The IFPI said this means that almost 40 percent of all CDs and cassettes sold around the globe are pirated copies--the highest proportion ever recorded by the organization.
"Piracy is sometimes and mistakenly called a 'victimless crime.' It is not," IFPI Chief Executive Jay Berman said in a statement. "The economic losses due to piracy are enormous, and they are felt thought the music value chain. Piracy also nurtures organized crime across the world, and it stunts investment, growth and jobs."