Piracy threatens future of music industry in Mexico

Delegation of recording industry leaders gathers in Mexico City

Mexico City, 17 May, 2001 - Mexican artists and record companies have developed a US$666 million music business that ranks eighth in the world, but the industry's future is now under threat because of soaring levels of music piracy.

Of an estimated 181 million recordings sold in Mexico last year, three in every five was a pirate copy. With a piracy rate of more than 63% of the total market, piracy is costing the legitimate industry estimated losses of US$300 million annually. A massive increase in illegal sales of CDs led to an 8% fall in the legitimate music market last year and a further 4.7% slump in the first quarter of 2001.

A senior delegation from the international and Mexican music industry is raising the problem in meetings with government officials during a visit to Mexico City this week. The delegation comprised: Jay Berman, Chairman and CEO of IFPI, representing the recording industry worldwide; Hilary Rosen, President of the Recording Industry Association of America (RIAA); Marco Bissi, President of Universal Music Mexico and Chairman of Mexican recording industry association AMPROFON; and Jurgen Ulrich, Director General of the independent record company Peerless.

The delegation, organised by IFPI AMPROFON, called on the Mexican authorities to crack down on the problem with coordinated strategies between the enforcement authorities, prosecution of the pirates and tough sentences reflecting the severity of the crime.

Action is needed in particular in Tepito, which accounts for more than two thirds of all illegal sales and where piracy thrives amid a climate of impunity.

The industry welcomed a recent improvement in Mexico's anti-piracy law and the measures earlier this year to strengthen the resources of the Attorney General's office. These encouraging moves need to be followed up with decisive anti-piracy enforcement actions. Pirate manufacturers and distributors must go to jail. Their activities are illegal, deprive the state of tax revenues and generate other forms of crime.

The explosion in piracy of CD-Rs in Mexico, combined with the traditional problem of cassette piracy, has taken the country's piracy rate from 45% to 63%, one of the highest national piracy rates in the world.

The stakes are high in the fight against piracy. Mexican music is a valuable export in the region, as well as accounting for more than 60% of all the records sold domestically. It is the local repertoire, and the investment needed to develop the next generation of Mexican artists, that is hit hardest by piracy.

Tax revenues, foreign investment and thousands of jobs are also under threat. Piracy is estimated to rob the Mexican fiscal authorities of US$80 million in tax revenues. Meanwhile several companies have been forced to cut their workforce by 10% in the past three months, and some retailers and medium-sized wholesalers have had to close.

Jay Berman, Chairman and CEO of IFPI, said: "Piracy in Mexico has now reached levels where international record companies are being forced to review their investments in the country. At the same time, huge damage is being done to Mexico's culture, as the decline in investment restricts the development of Mexican artists just at the time when Spanish-language repertoire is making inroads worldwide. This is a major problem, it is rapidly growing worse and it needs decisive enforcement action to bring it under control."

Marco Bissi, President of Universal Music Mexico, said: "Piracy is causing tremendous damage to the record producers, songwriters and artists who have helped create the success story of the Mexican music industry. Our companies have to lay off employees, and the government is losing an estimate US$80 million in taxes. This is a problem which must be tackled urgently."

Contacts for information:
Adrian Strain, IFPI, Tel: + 44 207 878 7900
In Mexico: AMPROFON, Alicia Carzorla, Tel: + 52 5281 6035

The Mexican Music Industry - Key Facts

Mexico's legitimate music market was worth US$666 million in 2000 up 6% in US dollar value but down 8% in unit terms on the previous year. Unit sales fell a further 4.7% in the first quarter of 2001.
Mexico is seeing a sharp slowdown in growth of CD sales, from 17% in 1999 to only 2% in 2000. Cassette sales fell by one-third last year. Piracy is a major reason for the decline.
Mexico is the eighth largest music market in the world and the second largest in Latin America (after Brazil). The music market in Mexico employs 50,000 people, directly or indirectly.
The share of Mexico's music market accounted for by local artists is one of the highest in the region. Local repertoire has risen from just over 50% over total sales in 1997 to 60% in 2000.
Piracy loses the Mexican and international recording industry an estimated $300 million annually. With 114 million pirate unit sales per year, Mexico has a pirate rate estimated at 63% - up from 45% last year.
Three in every five recordings sold in Mexico are pirate.
The major piracy problem in Mexico is illegal sales of CDs. It is estimated that 95% of all music disc piracy in Mexico is in the CD-R format.
Music piracy robs from the government, depriving Mexico's fiscal authorities of an estimated US$80 million in tax revenue.