Sun, Nov 30, 2003 - Page 11 News List

Broadband availability pushes piracy into hyperdrive

REUTERS , JOHOR BAHRU, MALAYSIA

A handwritten sign at the entrance to a tiny shop in southern Malaysia's busiest city sums up the music industry's colossal problems in Asia.

"1 CD for 7 ringgit," it beams in bright blue ink. This sum is equivalent to US$1.80.

As two policemen direct traffic just yards away, the shop's teenage manager brags of even better bargains, running a hand along makeshift shelves lined with hundreds of compilations -- from pop princess Britney Spears to Taiwanese idol Jay Chou.

It is just one of a dozen shops brazenly selling knockoff pop music CDs and DVD bootlegs of Hollywood films in a single neighborhood in Johor Bahru, only a few minutes' drive from Singapore -- and one of thousands scattered across Asia.

But as Washington presses Asia to curb the sophisticated piracy syndicates equipped with CD-burning technologies and stacks of blank discs that supply the shops, a bigger battle is brewing online against Web pirates in the fast-growing region.

The rollout of high-speed broadband Internet in India, China and Indonesia, three of the world's most populated countries, could expand the number of people downloading free music off the Web by millions a month.

To fight back, labels are releasing more hits to fee-based online music services in Asia, accelerating growth in an embryonic industry now dominated by just two companies -- Soundbuzz.Com and Sony Corp's Planet MG.

"The digital music medium is coming of age in Asia," said Sudhanshu Sarronwala, 38-year-old chief of Singapore-based Soundbuzz and former managing director of MTV Networks Asia.

Four-year-old Soundbuzz has licensing agreements with 65 record labels in the region and operates in 12 Asian markets in eight languages -- from Chinese and Korean and Japanese to the Bahasa languages of Indonesia and Malaysia.

Its clients include Web portals run by Microsoft Corp's MSN and Yahoo Inc. "We build the storefront look and feel for the client," said Sarronwala.

Asia was once prized by record labels including Time Warner Inc's Warner Music Group, EMI Group Plc, Universal Music and Bertelsmann unit BMG for its potential for growth as US and European markets mature.

Instead, recorded music sales in Asia are sliding faster than in the US and Europe, the International Federation of the Phonographic Industry (IFPI) says.

Asian music sales slid 13 percent in the first half of the year to US$2.59 billion, a fifth of the world's total, outpacing a fall of 10.9 percent globally. South Korea's fall of 23.1 percent was the worst, followed by Taiwan's 21 percent and Japan's 13.5 percent -- Asia's three biggest music markets.

In Taiwan, which accounts for 80 percent of Mandarin language music sales worldwide, around half of all music sold in the past two years was pirated, while nine of every 10 recordings in China are fakes.

Analysts say growth in legal music download sites in Asia's vast, upwardly mobile markets, in tandem with broadband Internet, could help stabilise the world music industry.

But whether paying sites take off depends on how quickly so-called peer-to-peer networks such as Grokster and KaZaa -- where surfers can download an entire 10-track album in 15 minutes -- are shut, said Simon Dyson, senior analyst at Informa Media.

"If they don't get that control, and broadband increases, then you can see music sales going right down," said Dyson.

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