Term Paper: Latin Music Industry Problems

Pages: 10 (2779 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Music  ·  Buy This Paper


[. . .] (Cobo, 2003)

CDs by popular U.S. And Brazilian artists sell for $2 apiece on the streets of this gritty frontier city, but not all the buyers know the illegal bargains might be helping to finance international terrorism. But diplomats from several countries said Ali Khalil Merhi, an alleged "bigfoot" in Paraguay's criminal underworld, sold pirated CDs in neighboring Brazil to raise money for al-Moqawama (Resistance), an extremist arm of the militant Islamic group Hezbollah (the Party of God) in southern Lebanon.

Merhi, 32, who has a police record for assault and piracy, was arrested on Feb. 25, 2000 and charged with selling millions of dollars worth of illegally copied music and software. He fled Paraguay in June 2000 after Esteban Aquino, a prosecutor in Paraguay's Secretariat for Prevention and Investigation of Terrorism, recommended that the investigation of him be expanded to include his alleged ties to terrorist organizations.

The prosecutor said Merhi had access codes to restricted web sites that promote international terrorism, and when they raided his apartment, police found software he allegedly was distributing to raise money for al-Moqawama. The software features film footage of terrorist attacks and interviews with suicide bombers before they died, said Aquino. It also provides a bank account number in Cheiah, Lebanon, where money could be sent to support al-Moqawama. In a certified translation of the software CD's Arabic contents, provided to Knight Ridder by Aquino, a radical leader exhorts listeners to strike at the United States and Israel. (hall, 2001)

In order to address this threat to free enterprise, and to global freedom, the government officials in latin American countries must decide on which side of the issue they wish to make their stand. With increasing amount of north American time, energy and military resources dedicated to fighting a global terrorism threat, the latin American countries can ill afford to be seen as supporting terrorists, and financing terrorism. However, the governments in these countries have not demonstrated the political will to make a stand in this area. Unfortunately it may take a global incident which can be traced directly to terrorists in Latin Americe before the countries will be willing to change their 'look the other way' policy on the basis of pirated music alone.

Offsetting the power of consumers to burn personal CD's

Music duplication is a world wide problem, and as such companies which make and distribute the music, and the recording equipment are at work on solutions which will prevent the copyng process. This presents one of the most positive approached to the issue.

According to Chmeilewski (2003) Macrovision's corporation is producing a softward package called Cactus Data Shield which allows consumers to play CDs in their PC, transfer copy-protected versions of the song-files to their computer's hard drive and listen to the tracks without needing to first insert the disc in the CD-ROM drive, but prevents the duplication of the tracks on the CD. Microsoft is also entering into the development of intrinsic solutions with the introduction of its Windows Media Data Session Toolkit, which it plans to give away to the recording labels. The software giant's approach to the problem may be the most effective. Dave Fester, manager of the Windows Digital Media Division, said the music new media session CDs contain two tracks of music _ one that's in standard CD format, known as "redbook audio;" and a second, encrypted data session that plays when the disc is inserted into a computer. The redbook audio portion of the disc is copy-protected with encryption software, which allows the disc to play in the home stereo, the CD player in the car and a portable Walkman, but is hidden from the PC. The second set of tracks are in compressed Windows Media Audio file that's wrapped in a copyright protection management software, which controls whether a song can be transferred to the computer desktop or copied.

After the demonstration, record labels seemed impressed with the technology. "EMI is really excited that Microsoft has provided a tool that makes it easier for music fans to move their music around and enjoy it anywhere," while at the same time preventing the music to be copied wholesale, said Jay Samit, senior vice president of EMI Recorded Music. (Chmielewski, 2003) Unfortunatley, this aspect of piracy and copy control is out of the hand of the Latin American countries. They can only wait and see if the advancing technologies can change the course of music piracy and sharing

Shutting down illegal Peer to Peer networks, or turning them into revenue channels.

Regarding the Internet, the International Federation of the Phonographic Industry (IFPI) notes that piracy is developing rapidly but believes that it is still too early to measure its economic impact. Even if cyber piracy potentially risks being even more devastating that physical piracy, the IFPI's response to this phenomenon has been a combination of information and education measures directed at consumers and service suppliers. They also have taken steps to stamp out illegal sites. In 1999, more than 15,000 illegal sites offering close to 3 million files were closed as a result of IFPI action co-ordinated with national associations. (European report, 2000)

Private organizations like the IFPI could be assisted by government funding, but it is likely that unless the governments perceive a financial benefit for themselves, they will not get involved.

One approach which could elicit government involvement is if the recording industry would offer the governments a financial incentive for their assistance. This could be done by allowing the government agencies to put a tariff on music products. In the same way that alcohol was taxed in the United States early in the country's history, as a way of monitoring alcohol and raising money, adding a small tariff to CD and other recorded products would create a revenue stream for the government. With the establishment of a positive financial relationship between legitimate CD sales and the local governments, the governments would have a reason to get involved, and take steps to stamp out piracy.

In regard to online music sharing, the same approach of revenue sharing could make the government's entrance into this problem profitable for all parties. Currently, a technology is called CintoA, is being used with an online service called Morpheus. This service allows users to download music for a fee. This is the same approach which Napster has taken since being purchased by BMG. Currently, Morpheus takes 30% of the revenue; the remaining 70% goes to the artist. If the governments could approach these organixationsl, and pledge their own support to fight piracy, and illegal sites in return for a revenue sharing agreement, a mutually beneficial arrangement could be developed.

In the long run, changing their resistance of file sharing into a profit plan could be the music industries, best strategy for a return to growth. "A business strategy that alienates your customer base isn't a good strategy. The most productive way to solve the problem is to satisfy demand." (Taylor, 2002)


Buckley, Cara. One-third of CDS around the world are copies. Knight Ridder/Tribune News Service; 10/2/2000

Chmielewski, Dawn C. Music industry to try new copy-protection measures. Knight Ridder/Tribune News Service; 1/20/2003.

Cobo, Leila. Latin music: Even pirates can't stall the sales spiral Billboard; 12/30/2000;

Cobo, Leila. Latin markets struggle as illicit product thrives Billboard; 2/1/2003;

Guevara, Michelle. Bootlegger's paradise. Latin Trade; 11/1/2002.

Hall, Kevin. Paraguay's Bootleg Music industry Helps Finance Global Terrorism. Knight Ridder/Tribune Business News; 4/11/2001.


Taylor, C. Burn, Baby, Burn:… [END OF PREVIEW]

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