This year’s report, available on the IIPA website at www.iipa.com, outlines problems in a wide variety of countries but particularly stresses continuing problems in Russia and China, and emerging issues related to digital distribution in global markets, including in Spain and Canada.

Neil Turkewitz, RIAA Executive Vice President, International, offered the following comment:

“Today’s report reflects the growing importance of the Internet, and mobile platforms, as mediums for the transmission of copyrighted materials, both legitimate and infringing. While legitimate online commerce is rapidly growing, we regrettably face tremendous obstacles in building a healthy environment for the online music trade. It is estimated that globally only one out of 20 downloads is authorized, and online piracy rates in many markets is in the vicinity of 99 percent. As the music business evolves from a business based on the sale of physical goods to one based on the licensing of signals, the issue of adequate copyright protection becomes ever more important. There are some countries, like Spain and Canada, who have been too slow to adapt their legal regimes to the requirements of the 21st century, and their markets have suffered. Spain in particular has been badly affected, losing approximately two thirds of its market value over the past five years and suffocating Spain’s music community.

“China continues to figure prominently in our thinking. The Chinese government has adopted policies that effectively extend the domination of pirate product in the physical marketplace to the Internet as well. Market access barriers that prevent a robust presence for U.S. business ventures for digital distribution, along with a failure to address the practices of major companies like Baidu that operate music services wholly dependent upon providing access to infringing materials, have combined to produce an environment dominated by piracy. We applaud USTR for having raised a number of these issues in WTO litigation, and we look forward to prompt and complete implementation by China. But most importantly, we call upon China to clarify that its copyright law and Internet regulations do not allow enterprises like Baidu to operate services that are predicated on, and which induce, online theft. As long as these practices remain in place, there is little hope for real growth in the online music market in China.

“The Internet offers tremendous opportunities for creators to reach global audiences, and it carries with it the potential to serve as a catalyst for unprecedented cultural production. This potential, however, remains unrealized. Indeed, in an environment dominated by piracy, even contemplating this potential is increasingly difficult. We hope that this submission will help governments wake up to the cultural, economic and social risks associated with failure to address rampant online theft.”