The ip coalition report I



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MUSIC INDUSTRY

A
t present, there are 38 record companies in the Philippines giving livelihood to more than 15,000 people - from the composers, singers, musical arrangers, musicians, to the record bar girls, technicians, and recording studio personnel (Philippine Association of the Recording Industry Inc., PARI).

These record companies comprise the Philippine Association of the Record Industry, Inc. (PARI), a non-profit, non-stock, and purely private industry organization formed in 1972. For more than 30 years, PARI has 1) promoted and developed a legitimate and viable music industry, 2) endorsed and improved the Filipino music to world class status for it to be able to penetrate the world market, 3) protected copyright owners against unauthorized use, reproduction, and sale of music and sound recordings, and 4) maintained musical sound recording as a medium that provides wholesome entertainment and positive values to the public (Position Paper of PARI on the OMB32, 2002).

T
he Philippine music industry has provided employment to Filipino talents, and has also contributed to the local economy through the taxes (VAT) remitted to the government. From 1994-2003, hundred millions of pesos, in the form of value added tax (VAT), were collected from the record sales of the industry. The highest estimated tax collection was registered in 2000, at P212 million, while the lowest was in 1990, at P45 million. Estimated tax payment from the music industry has also been increasing from 1990 to 1998 (Table 9).

Based on the data collected from PARI, the Philippine music market has generally been dominated by the foreign records/albums. As presented in Table 10, the share of local sales has been declining since 1995. In 2000, however, this market share expanded to 42.7%, but not enough to overtake the sale of foreign albums.

Music Piracy


The declining sales share of the local records has generally been attributed to piracy. According to the Music Piracy Situationer prepared by PARI (2002), “the Philippine music industry was a thriving industry before the vicious tentacles of music piracy choked it to near collapse.”

PARI also said that piracy in the Philippines “has been a problem since twenty years ago, when vinyl album and then cassettes were pirated” (Position paper on OMB, 2002). Music IPR infringement was in the form of cassette piracy that was contained or limited to sidewalks, public markets or door-to-door selling. However, due to optical media technology, duplication capabilities of IPR violators have increased a hundred-fold (Optical Media Bill FAQ Primer).

In 1997, pirate CDs from China, and bootlegs from the United Kingdom and Germany started flowing in the Philippines (IIPA Special 301 Recommendation, 1997). During the succeeding years, public markets, major steers, and malls in the country were flooded with pirate CDs (Music Piracy – A Situationer, April 2002, by PARI).

Recent developments showed that the country no longer just imports pirated CD products but manufactures them as well, as pirate CD plants started to emerge all over the Philippines. This resulted to the existence of rampant CD piracy; and sale of these illegal products has extended to legitimate malls and popular flea markets, in addition to the vending stalls in the streets.

Until recently, the vast majority of pirate optical media products were smuggled or otherwise imported into the country from abroad. This is no longer the case. There are believed to be at least eighteen active production lines for optical media products in the Philippines, more than twice as many a year ago, and perhaps many more than that ... The recording industry estimates that at least half of the pirate music CDs circulating in the Philippines are locally manufactured; the rest are imported from Malaysia, Taiwan, Indonesia and Hong Kong (IIPA 2001 Special 301 Report: Philippines).

With these changes, it is assumed that cassette piracy in the Philippines is being substituted by CD piracy during the latter years of 1990s up to the present. IIPA reported that in 1999, “45% of all music CDs sold in the Philippines are pirate, in contrast to the piracy rate of 13% for the cassette format” (IIPA 2000 Special 201 Report: Philippines). This has also been consistent with the rising preference of the public in buying CDs as opposed to cassette tapes. Further, with the optical media technology, replication of music records in CDs has become so easy and less costly than the illegal reproduction using the cassette medium.

A
n investigation on the medium used by consumers in listening to music was conducted to determine whether there is an increasing preference for music in CD format. The sales figure of music appliances compatible for CD playing was the factor used in this analysis. It was observed that the sales, of the set of appliance mentioned, have been improving through the years, creating a more favorable market for the CD records. According to the National Statistical Coordination Board (NSCB) statistics33, the share of this music component to the overall audio appliance sales rose from 23.0% in 1996 to 57.7% in 2003.

How serious is the music piracy in the Philippines? Based on Figure 6, music piracy rate has been increasing from 1997 until 2003. This trend is observed in the Intellectual Property Coalition34 (IPC) Music Piracy Estimates. From 14.1% piracy rate in 1997, it climbed to 29% in 2001, and further rose to 40%35 in 2003. Meanwhile, the music piracy rate estimates by the International Intellectual Property Alliance36 (IIPA) were pegged at 20% from 1997-2000. However, the figure shot up to 33% in 2001, further climbed to 40% in 2002, and settled to that level in 2003.




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