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Report: Online Piracy Supplanting Physical

1 May, 2012 By: Erik Gruenwedel

The market for pirated movie and music discs increasingly is being replaced by digital files and websites offering illegal streaming content, according to a new report by the U.S. Trade Representative.

The “Special 301 Report” found that among countries on the government’s “priority watch list,” which include Algeria, Argentina, Canada, Chile, India, Indonesia, Israel, Pakistan, Russia, Thailand, Ukraine and Venezuela, China remains a major concern due to its massive population and burgeoning adoption of technology to consume entertainment (including by legitimate means).

The April 30 report found that illegal downloads account for an estimated 99% of all music downloads in China, and that piracy of copyrighted material over the Internet continues to be a major problem.

“China’s Internet users are increasingly turning to streaming media to watch foreign television shows and movies,” the report read.

While Beijing reportedly sanctioned 14 websites for offering illegal music downloads, the impact is acute when considering that total music sales (physical and digital) in China in 2010 topped $64 million — less than the $69 million generated in Thailand, a country with less than 5% of China’s population but about the same per capita GDP.

If Chinese sales were equivalent to Thailand’s on a per-capita basis, music sales would be almost $1.4 billion. By comparison, music sales in the United States in 2010 were $4.2 billion.

Indeed, while Chinese websites have made efforts to curb distribution of pirated content, the report found that more than 75% of illicit sellers have reportedly relisted the infringing goods on sites.

The U.S. Trade Representative encouraged China and other countries to improve protection of intellectual property rights in an effort to increase sales of legitimate goods and services from all sources, including imports.

Representatives from the Motion Picture Association of America and the U.S. Chamber of Commerce hailed the report.

“Strong rules and effective enforcement regimes are an essential measure of the climate for companies small and large who wish to conduct business with foreign countries,” Mark Elliot, with the Chamber of Commerce, said in a statement.


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