Bootleggers Turning to Burning: RIAA Says CD-R Piracy is on the Rise

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The recording industry is preparing for a new battle against bootleggers as rapid innovations in digital storage technology have given anyone with a few hundred dollars to spend the opportunity to make letter-perfect copies of copyright-protected audio CD material. Simultaneously, manufacturers of CD recorders are gearing up to defend the rights of consumers using the systems merely to enhance their own music collections.

Leading the fight to protect copyrighted material is the Recording Industry Association of America (RIAA). Member companies of the 36-year-old non-profit group produce, manufacture, and distribute 90 percent of the copyright-protected music in the United States. “There is no question we are seeing a huge proliferation in the use of CD recorders,” says RIAA Vice President Frank Cratin. “Unfortunately, anybody with a computer and a little technical knowledge can be in the piracy business.”

It’s the RIAA’s definition of piracy that’s setting off alarms among manufacturers and CD-R drive owners. The association maintains that making copies of CD tracks onto CD-R discs is copyright infringement, even if the duplication is for personal use. According to RIAA figures, pirating music by illegally recording performances or duplicating CDs costs the $12 billion U.S. recording industry nearly $300 million annually.

But burning for pleasure and not for profit is not a crime, declares Jonathan Thompson, vice president of the Consumer Electronic Manufacturers Association (CEMA). He says the 425 companies his organization represents, which include CD-R manufacturers, support law-enforcement efforts to crack down on money-making CD-R bootleggers, but believe the RIAA is going too far in suggesting that all CD copying is a form of piracy. “There is nothing wrong with having this equipment for legitimate, in-home use,” says Thompson.

As commercial CD manufacturers dig in to protect their business, the RIAA is racing to catch up with the growing numbers of CD pirates. In 1997, while conducting sweeps of retailers suspected of selling bootlegs, the RIAA found 442 CD-R discs. It may not seem to be a serious problem when compared with the 936,000 compact discs illegally copied in plants and the 414, 101 bootleg and counterfeit cassettes taken off the market during 1997. However, the numbers of illegal cassettes and plant-produced CDs have been dropping every year, while the numbers of “burned” pirate CDs are dramatically increasing.

The RIAA reports that more than 3,000 CD-Rs were seized from street vendors and stores in February 1998. Cratin says this is only scratching the surface of the blooming home-pirating industry. Shutting down the businesses of CD-R bootleggers who are widespread and operating in the privacy of their own homes, will likely prove far more difficult that uncovering illegal CD plants. But the RIAA maintains that these better-hidden, CD-R based businesses are operating in violation of the federal anti-bootlegging statute passed in 1994, under which convicted boot-leggers face up to ten years in prison and/or a fine of $250,000.

The one consolation for the RIAA is that, although there may be many more CD-R pirates, they are unable to produce as many copies as the plants. Cratin says most pirates have 2X or 4X recorders that can only copy one disc at a time, and that even the more advanced copying businesses with commercial CD-Rs can only produce up to 100 copies. But, even with their lower production volume, the bootleg and counterfeit dealers are able to survive because the profit margins are so high. Blank CD-R discs are sold for as low as $1 each, while burned bootleg CD-Rs retail for anywhere from $ 10 to $25, depending on the rarity of the music.

The RIAA plans to return to the tactic used when bootleg cassette production first began, which includes use of informants, undercover agents, and surveillance of retailers to weed out distributors and manufacturers of illicit CD-Rs. The group is preparing a public relations campaign to teach people to spot CD-Rs and report dealers selling illegal copies. The association also wants to educate consumers about what activities it considers illegal, including downloading bootlegged material from the Internet; selling, buying, or trading homemade CDs; or recording any copyrighted music from a CD onto another CD.

The Home Recording Rights Coalition (HRRC) sides with CD-R manufacturers in supporting consumers’ rights to copy audio CDs that they own for personal use. The coalition was formed in 1981 to combat the push to outlaw home copying of television programs. The Supreme Court thwarted that effort, declaring that taping IV shows for private viewing has no impact upon the marketplace and is therefore unobjectionable. Consumer advocates maintain that this legal precedent applies in the case of CD recording, insisting that creating mixes or changing the order of tracks on a new CD has no demonstrable effect on the recording industry.

But the RIAA believes that CD recording does hurt the industry by taking away artists’ creative and financial control over their work. The association maintains that, with consumers making their own music compilations and mixes, record companies and artists lose a portion of potential sales of their own products.

The RIAA acknowledges that it would be impossible to stop copying by monitoring private use of CD-R drives. Instead, the group wants to encode copyright-protected CDs to prevent them from being copied. The material on the CD would degrade as the codes are “stripped out” during an attempt to copy it. Manufacturers of CD-R drives also could incorporate a flagging system that would mark each copy made so that CD-R discs Could be traced to the machines on which they were recorded.

Cratin says the group needs the cooperation of hardware and software companies to move forward with the plan. When asked about the likelihood of manufacturers agreeing to work with the RIAA, he responded, “They need to be careful, because there may be an obligation on their part not to contribute to piracy.”

Thompson says the manufacturers represented by the CEMA steadfastly refuse to build their recorders to recognize the copyright encoding that would prohibit CD-to-CD duplication. He doesn’t view their position as supporting piracy, but as taking a stand for consumers’ rights. And Thompson says he doesn’t see why the RIAA wants to punish manufacturers for the illegal activities of pirates. “The equipment is not the problem,” he says. “What’s dangerous here is the behavior of people. Go after these people and punish them.”

(Recording Industry Association of America, 1330 Connecticut Avenue Northwest, Suite 300, Washington, DC 20036; 202/775-0101; Fax 202/775-7253; http://www.riaa.com. consumer Electronics manufacturers Association, 2500 Wilson Boulevard, Arlington, VA 22201-3834; 703/907-2600; Fax 703/907-7601; http://www.cernacity.org)