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One out of three music CDs sold worldwide is a bootleg product. In 2004, 1.2 billion bootleg CDs were sold worldwide, generating illegal profits amounting to 4.6 billion U.S. dollars. This value represents 34% of the world’s music album market.
According to data from Phonograph Industry International Federation (PIIF), the top ten Countries in Bootleg disks are: Paraguay (99%), China (85%), Indonesia (80%), Ukraine (68%), Russia (66%), Mexico (60%), Pakistan (59%), India (56%), Brazil (52%) and Spain (24%). Though China’s percentage at 85% is the second biggest, in absolute terms it constitutes the biggest illegal market on the planet. This list is still complemented by four additional Countries - Bulgaria, Canada, Korea and Taiwan – where bootlegging has been growing.
Clandestine sales are higher than legal sales in 31 Countries. The number of bootleg disks all over the world has doubled in the last five years.
The Brazilian phonograph market, which was the 6th biggest in the world in sales volume, has dropped to the 12th position due to bootleg practices that represent 60% of the domestic CD market. Due to this serious problem, the Federal, State and Municipal Governments lost R$ 250 million in taxes that were not collected in 2003. The growth of this illegal market in the last five years was responsible for a 50% reduction in the number of music industry employees, including close downs and a reduction of 60% in contracted musicians besides a drastic dwindling in new releases.
In 2004, more than 17 million bootleg CDs were apprehended in the Country. Presently, illegal copies production in Brazil surpasses 100 million units per year.
· DVD illegal market growth
DVD Sales have been growing worldwide and so have the product’s illegal sales.
While the moviemaking industry planned to increase DVD Sales and popularity, the bootleg practices grew more sophisticated and surprised the market – DVDs of movies that were not released in theaters yet are commonly available.
In Latin America, bootleg DVDs reaches 45% of marketed products, according to data from Intellectual Property Defense Association (Associação de Defesa da Propriedade Intellectual - Adepi). Globally the percentage reaches 22%. In Brazil, 35% of the market is supplied by bootleg products, causing a yearly loss of R$ 340 million. In
2005 alone, 13.2 million bootleg units were apprehended in the Country, according to PIRPA (Phonograph and Intellectual Rights Protection Association).
· Software
Software bootlegging remains a great worldwide challenge. With the increase of Internet access, software companies have been facing a fast increase in bootlegging, as file exchange networks and sites make easier to exchange all kinds of copyright protected material.
According to surveys developed by ABES (Associação Brasileira das Empresas de Software – Brazilian Association for Software Companies ) and by BSA (Business Software Alliance), 35% of the installed software in PCs worldwide, in 2004, was illegal. Losses due to bootleg practices amount to around US$ 33 billion. In more than half of the 87 surveyed countries the bootleg rate was higher than 60%. In 24 Countries it was higher than 75%. The Countries with the highest bootleg rates were Viet-Nan (92%), Ukraine (91%), China (90%), Zimbabwe (90%) and Indonesia (87%). The lowest rated Countries were the United States (21%), New Zealand (23%), Austria (25%), Sweden (26%) and the United Kingdom (27%).
An important factor to determine losses caused by bootleg practices in a specific Country is the software market size in that Country. The United States, for example, presented the lowest bootleg rating of all surveyed Countries, but had to bear the highest losses: US$ 6.6 billion.
Emerging markets in Asia-Pacific, Latin America, Eastern Europe, Middle East and Africa correspond to one third of computer sales today, but only one tenth of expenses with software.
In Brazil this kind of illegal practice rating amounts to 61% of the total installed programs. I.e., six out of ten software programs sold are illegal, what places the Country in the 10th position, with losses amounting to something around US$ 659 million. If this rate dropped 10 percentile points, the Country would be able to create 13 thousand new jobs and increase tax collection in R$ 1 billion.
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