Indonesia's record industry dying as piracy gets worse

Indonesia's record industry dying as piracy gets worse

Berni K. Moestafa, The Jakarta Post, Jakarta

Debuts by new Indonesian artists may soon become a thing of
the past.

Digital piracy, through the duplication of CDs and VCDs, is
rapidly taking over the market and pushing the local recording
industry to the brink of extinction.

The end may be as near as five years away, said Arnel Affandi,
general manager of the Sound Recording Industry Association of
Indonesia (Asiri).

"For every legal album sold on the market there are six
illegal ones," he said on the sidelines of a three-day Asia-
Pacific symposium on the protection and enforcement of copyright
organized by the World Intellectual Property Organization (WIPO).

Sales of pirated recordings, Arnel said, were eating into the
industry's market share. Monthly sales of recordings had fallen
to below three million from between eight and 12 million in 1997
and before.

In 1997, only 12 percent of the recordings sold were pirated.
Now the figure is 600 percent, meaning six pirated recordings are
sold for each original one, Arnel said.

He explained that the surge in piracy stemmed from the spread
of cheap VCD players. "VCD technology was rejected in Europe and
the United States, so they (the pirates) shifted the technology
to Southeast Asia in 1998. Indonesia became their prime market
due to the political upheaval at that time."

The unbranded VCD players quickly made their way into the
homes of families throughout the country, including lower income
homes. Today one can purchase dozens of different types of VCD
player for less than $10 a unit in places such as the popular
Glodok electronics market in West Jakarta, Arnel said.

In Jakarta alone, Asiri has documented the presence of 40
illegal machines duplicating CDs and VCDs. Each can spew out at
least 500,000 discs per month.

Indonesia's major local record companies are Aquarius, Musica
and Indo Semar Sakti. Foreign record companies include Sony
Music, BMG Music, Warner Music, Universal Music and EMI Music.

A drawback of the music industry was its unpredictability, as
changes in market tastes could make or break artists. If the
current rate of piracy prevailed, producers would likely prefer
releasing compilation albums or re-releasing the recordings of
established artists rather than betting on new artists.

Pressure for the government to act is looming. The United
States has already placed Indonesia on its priority watch-list.
This is one step below being classified as a priority foreign
country, which automatically entails economic sanctions.

These sanctions could start with cuts in export quotas for
Indonesian products like textiles and steel, and lead eventually
to a full-out embargo.

"I was asked by several non-governmental organizations what
the government's response is to that threat. I said there was
none."

Nonetheless, the government is working on several regulations
to cope with the threat of digital piracy.

The Director of Copyright, Industrial Design, Integrated
Circuit Layout Design and Trade Secrets at the Ministry of
Justice and Human Rights, Emawati Junus, said her office was
currently drafting an optical disc regulation.

The regulation would tighten supervision over the production
of CDs and VCDs by, among other things, requiring manufacturers
to inscribe a serial number on each disc they produce.

But that may not be enough. Arnel said the industry planned an
antipiracy campaign to dissuade consumers from buying pirated
goods.

And in an unlikely piece of collaboration, Asiri has asked the
Indonesian Ulemas Council (MUI) to issue a fatwa (Islamic
religious decree) declaring pirated goods to be haram (forbidden
under Islamic law).

Arnel reasoned that pirated goods were haram as they
constituted stolen property. Furthermore, pirates usually turned
to porno VCDs to keep duplication machines running as a shutdown
would require extra money and time to turn them on again.

"So porno VCDs are traveling along the chain of pirated goods
all the way from duplication and distribution right up to sales,"
he said.

Arnel said that the MUI would likely issue a haram edict in
the next few weeks.