September 29, 2005

Music industry wants jail for China pirates

By Kirby Chien

BEIJING (Reuters) - China must shut down pirate music
factories and jail the perpetrators if it is going to keep its
promise to address the $250 billion-a-year problem, according
to a top music industry trade group.

The International Federation of the Phonographic Industry,
which represents Sony Corp. and Bertelsmann AG's Sony BMG,
Warner Music Group, and EMI Group Plc among others, reckons
only 10 percent of music bought in China meets copyright rules,
and only a small fraction of China's 86 registered optical disc
factories are producing legitimately.

"We cannot be satisfied with 90 percent piracy ... no
matter the good intentions," the federations chief executive,
John Kennedy, told Reuters in an interview.

"If the problem is properly addressed then you will have
something like 25 plants (left). That takes a lot of political
will to want to do that," said Kennedy, in Beijing talking with
government agencies to get his message across.

"What we need is criminal prosecutions to put people in

China joined the World Trade Organization in 2001 and is
generally seen as having fulfilled its commitments that it made
at the time -- apart from fighting piracy.

But while the central government seems committed to the
changes, local governments have been criticized for failing to
implement many reforms.

"There comes a point where you see no evidence that the
carrot and diplomacy are working," Kennedy said.

"And that's when people use the stick ... In the extreme
that could lead to moving China up a priority watch list or
even a WTO complaint," he warned.

Kennedy's trip comes just weeks after a similar visit by
the new head of Washington's anti-piracy campaign. The U.S.
says about 70 percent of the counterfeit products that enter
the United States are from China, while piracy in general costs
U.S. businesses about $250 billion in lost sales annually.


Chinese President Hu Jintao promised U.S. President George
W. Bush earlier this month to take measures to protect
intellectual property.

Kennedy said Beijing must move beyond rhetoric and toward

Kennedy plans to visit China three times next year to
review progress made by local authorities, hoping to see more
concrete results than the previous annual trips produced.

Groups like the federation and the Motion Picture
Association of America, which represents the world's major
movie studios, have expressed frustration that China acts to
close down factories that churn out counterfeit goods when
presented with evidence but does little on its own initiative.

Optical disc plant inspections are also a focus for the

It says official supervision of disc plants is ineffective,
since the inspectors have close ties with the factories'
owners. So it proposes joint inspections, including a
representative from the international industry.

"In January, we could see that the new Internet regulations
are up to international standards, and we could see that a
joint plant visitation programme has been introduced."

The spotlight has fallen on the new Internet regulations
after a Beijing court ordered Chinese search engine leader Inc. to stop directing users to illegal music
download sites last week.

The suit was initiated by a joint venture between EMI Group
and a Chinese partner, and is a litmus test for the federation
and its members in China. The case could set a precedent as
Beijing seeks to show it can enforce copyright laws.

The judge in the Baidu case could hand a decision by
October 12, said Kennedy.

"It is still an adversarial process, because inevitably we
are being critical. But we want to sit together and work
together," he said.

(US$=8.1 yuan)