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How To Stop Piracy: Raid CD-R Moguls
An anonymous reader writes "In what appears to be a not-so-legal move, Mexico's equivalent of the RIAA used federal police to raid the installations of Grupo Mekong, responsible for 200 of the 400 million virgin CDs imported each year, accusing them to be "capos" of the Piracy bussiness in Mexico.
What is the rationale? Record companies buy only 20% of Mekong merchandise, so the other 80% must be going to pirates! Yeah, Never mind computer users ,independent labels or other legal uses.
You can see the article here but what amazes me is the behaviour! What will the next step be? Raid the truck companies who deliver the CDs? "
I would have to assume that the RIAA would have us all listening to music after we crawled to them to get it, if they could get away with it.
And I don't believe it's a matter of pressing, it'd just need to be done in an industrial burner. Something like a rackmount system that took 1 real CD and dumped out 20 copies.
I can understand them wanting to shut down things like this, but honestly, this step is going a little overboard for the need of raids. What's funny is they probably had to pull the Narcotic guys off stopping drug dealers to round up all the CDRs.
And AOL probably presses more discs than every record label in the world combined..
Whether one is committing a crime or not, (one can even be 100% legit) cops in much of the world will not hesitate to hassle one if they think they can get 'don't hassle me' bribe money.
This is Mexico it happens all the time. Gez I know someone who was arrested & locked up for reporting the theft of her handbag, she paid a bribe & she was out of there. Only thing was she didn't know how things worked in the 3rd World because it took 2 days of her being locked up before she put 2 & 2 together (just because a cop wants a bribe doesn't mean they'l spell things out for you)
I'm not a taxi driver, but I am getting fed up with Teostos antics. I have been in contact with certain consumer rights lobby groups, lawyers and journalists to see if anything could be done about this madness.
How is the same in principle? Well the thought behind it is very similar. In both cases the record industry just assumes to know what those empty cd-r's will get used for. The only difference is the choice of action taken in light of that assumption.
When you think about it the thing happening in Mexico is the more logical one. Because when the first assumption is made the more logical step is to follow up that assumption with legal measures. At least the mexican stand on cd-r's is consistent in the sense that once they view it as an illegal activity they take legal actions... The dutch RIAA on the other hand chose to demand percentages of the profits made on the cd-r's. So people who just buy a 10 pack cd-r's to backup data are also paying the record companies through those percentages. This choice may at first seem logical as well (again once the first assumption is accepted) were it not for the fact that it is inconsistant with the record companies constant fight on piracy. So on the one hand they charge people for burning cd's because there are probably copyrighted mp3's involved but on the other hand they are working to make sure that no copyrighted material even exists unless pressed on their own releases. Its like on the one hand banning guns while on the other hand demanding a percentage for every gun sold.
So at least in Mexico a wrong assumption leads to an action that can be justified by that assumption while in holland a wrong assumption leads another action which in itself cant be justified by the wrong assumption.
Ah well, this whole problem will be solved with the new copyprotected discs, wont it? hehe
PjotrP
thank you for the perspective, it is great to get a view from someone living in Mexico instead of the rest of us just making blind suppositions. I worked there for a while about a decade ago, and can certainly see how a financially powerful group like the RIAA could find 'friends' in the government for long enough to make radis like this. I still remember all the money i had to give the police in Mexico City just to keep them from writing my foreign car a ticket every day ...
Um, while James Russell (I think) did actually come up with the concept for what would become the CD in 1965, Sony and Philips didn't popularize the format till 1983. So, no CDs were kicked back in the 50's - 60's.
Also remember that even today, record contracts include at least a 10% "breakage" or "container: allowance off the worldwide gross prior to calculating how many rolls of pennies the artist will get, after recouping all expenses. What they do with that 10% (since CDs don't break in shipment like the shellac records for which the breakage allowance was instituted) is a mystery. Some labels actually skim 25% off the top. No need for CD kickbacks there.
Yep, 25%. You want to see just how egregious some record contracts are? The following is clipped from an actual label contract presented to the prospective band last week. All identifying brands and names have been removed:
ROYALTIES
Company shall accrue to Artist the following royalties for the sale by Company, its licensees or assigns, or long playing Albums derived from the Master Recordings against which all sums paid to Artist herein shall be recouped.
(a) With respect to records sold up at Company's or its distributor's "top line" price level in the United States, a royalty at the rate of ten percent (10%) computed on the (SRLP) list price less a 25% container deduction.
(b) With respect to each particular type of record sold in Canada and Japan (including records exported to third parties in Canada and for which Company is paid by such third parties), royalties shall accrue at Eighty Five percent (85%) the rate applicable under subparagraph 6(a).
(c) With respect to each particular type of record sold in Germany, Austria, Switzerland and the European Economic Community (including records exported to third parties for such territories and for which Company is paid by such third parties), royalties shall accrue at Sixty Five percent (65%) the rate applicable under subparagraph 6(a).
(d) With respect to each particular type of record sold for any territory throughout world not specifically mentioned in subparagraph 6(a), 6(b) and 6(c) (including records exported to third parties in such territories and for which Company is paid by such third parties), royalties shall accrue at Fifty percent (50%) the rate applicable under subparagraph 6(a).
(e) With respect to records sold at Company's or its distributor's "mid line" price level through normal trade channels, royalties shall be at Seventy Five percent (75%) the rate set forth in subparagraph 6(a).
(f) With respect to records sold at Company's or its distributor's "budget line" price level through normal trade channels, royalties shall be at Fifty percent (50%) the rate set forth in subparagraph 6(a).
(g) Sales of any Singles, Extended Play Singles and recordings in the United States which are not long playing Albums shall be paid at the rate of Ten percent (10%) computed on the (SRLP) list price less container deductions and any taxes. Sales outside the United States shall be proportionally reduced according to the formula specified in 6(b), (c) and (d) above.
(h) With respect to the licensing of the Master Recordings to third parties, including but not limited to usage such as record clubs, compilation records and synchronization usage, royalties shall be at the rate of Fifty percent (50%) of the net amount of any such fees received by Company, its licensees or assigns.
(i) No royalties whatsoever shall be payable to Artist hereunder with respect to records (i) distributed to any person or entity primarily for purposes of promotion, (ii) sold as "scrap", "overstock" or "surplus", (iii) distributed as "free goods" (limited to no more than 20% or "bonus" records).
(I'm surprised there isn't a clause about shaking the artist by the ankles on a monthly basis to get his loose change.)
Beyond that, the more common kickback to organized crime in the music business in the 50's - 60's was cash applied to payola to help the "investments" of organized crime climb the charts.
"The pie shall be cut in half and each man shall receive.....death. I'll eat the pie."
I'm a British software developer living in a small town on the Pacific coast two hundred miles north of Acapulco. A good weekly income here is 1000 Pesos (US$100), a professional with a college degreee might make 1500 Pesos (US$150) a week. The local Commerical Mexicana, a WalMart equivalent, charges roughly the same for CDs as in the US, so a single CD is at least 10% of gross weekly income.
Of course people don't buy their CDs from Commercial Mexicana, they buy them from the smaller music stores, whose stock is almost entirely CD-R-based, and who charge more like 30 Pesos.
When I first moved here I spent a couple of hours at a restaurant having my brain picked by Juan Carlos, a Mexican "Del-boy" (the dodgy-goods trading hero of "Only Fools and Horses"). He was interested in improving the hard drive capacity of his CD duplicating kit -- the time he had to spend each day ripping master CDs to the burner's hard drive was down-time for the burner, and so being able to hold a larger library of masters on the hard drive would reduce the number of rips he had to do each day to meet that day's orders.
I don't condone such blatant copyright infringement, but the fact is that the CD-R makers are selling to people who would not spend the equivalent on 'official' discs (when I first moved to the US CDs were half the price I'd been paying in the UK, so I probably tripled or quadrupled the number of CDs I bought, doubling the amount I spent.)
The ultimate solution for the record companies has two prongs. First, the per capita income of the target market can be raised, but that's out of their hands and is hard to do in an economy that is hampered by some degree of corruption and by import/export tariffs that are high (or worse, indeterminate -- importing goods into Mexico may be legal, but the process is very erratic, which makes it hard to establish a reliable supply-chain). Second, bring the unit price more in line with the disposable income of the target market.