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A New Approach to U.S. Copyright Policy against Piracy in China
Unformatted Document Text:  7 although the nationwide piracy level has dropped slightly to 88%, the problem prevails, with increased losses from $120 million in 2000 to $160 million in 2001. Table 1. China: Estimated Trade Losses Due to Piracy and Levels of Piracy (in millions of U.S. Dollars) Industry 1996 1997 1998 1999 2000 2001 Loss Level Loss Level Loss Level Loss Level Loss Level Loss Level Motion Pictures 120.0 85% 120.0 75% 120.0 90% 120.0 90% 120.0 90% 160.0 88% Sound Recordings / Musical Compositions 176.8 53% 150.0 56% 80.0 56% 70.0 90% 70.0 85% 47.0 2 90% Business Software 507.5 95% 987.9 96% 808.4 95% 437.2 91% 765.2 93% 714.6 93% Entertainment Software 1,380.0 97% 1,409.4 96% 1,420.1 95% 1,382.5 95% NA 99% 455.0 92% Books 125.0 NA 125.0 NA 125.0 NA 128.0 NA 130.0 NA 130.0 NA Totals 2309.3 2792.3 2553.5 2137.7 1085.2 1506.6 Source: International Intellectual Property Alliance. (2002). 2002 Special 301 Report: People’s Republic of China. Between 1998 and 2000, China claims to have seized more than 54 million pirate music CDs (IFPI, 2002). According to the 2001 IFPI report, audio piracy is rampant in China, with illegal recordings accounting for more than 90% of the market (IFPI, 2001). Anti-piracy action has had an impact on Shanghai, where piracy at the retail end has been reduced to a manageable level (IFPI, 2001; IIPA, 2002). Nevertheless, the recording industry is now plagued by Internet piracy. There has been an increasing number of sites hosted on Chinese servers containing MP3 files that infringe on copyrights. Also, file- sharing services based in neighboring Asian countries have established a number of mirror sites in China, raising great concern (IIPA, 2002). While most business software piracy occurs at the corporate end-user level, counterfeiting of enterprise software and hard disk loading are also major problems in China (IIPA, 2002). According to the Business Software Alliance (BSA) 2001 report, software piracy rate in China increased to 94% and its retail revenue lost to piracy reached $1.2 billion in 2000 (BSA, 2001). Another major concern about software counterfeiting is the increase of exports. Now it is well known that some of the most 2 The estimated losses to the sound recording/music industry due to domestic piracy are US$47 million for 2001, and exclude any losses on sales of exported discs, which have decreased substantially in the last few years. This number is also based on sales at pirate prices. Using a “displaced sales” methodology, the industry estimate for losses would be US$418.5.

Authors: Mun, Seung-Hwan.
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7
although the nationwide piracy level has dropped slightly to 88%, the problem prevails,
with increased losses from $120 million in 2000 to $160 million in 2001.

Table 1. China: Estimated Trade Losses Due to Piracy and Levels of Piracy
(in millions of U.S. Dollars)
Industry
1996 1997 1998 1999 2000 2001
Loss Level Loss Level Loss Level Loss Level Loss Level Loss Level
Motion
Pictures
120.0 85% 120.0 75% 120.0 90% 120.0 90% 120.0 90% 160.0 88%
Sound
Recordings /
Musical
Compositions
176.8 53% 150.0 56% 80.0 56% 70.0 90% 70.0 85% 47.0
2
90%
Business
Software
507.5 95% 987.9 96% 808.4 95% 437.2 91% 765.2 93% 714.6 93%
Entertainment
Software
1,380.0 97%
1,409.4 96%
1,420.1 95%
1,382.5 95% NA 99% 455.0 92%
Books
125.0 NA 125.0 NA 125.0 NA 128.0 NA 130.0 NA 130.0 NA
Totals
2309.3
2792.3
2553.5
2137.7
1085.2
1506.6
Source: International Intellectual Property Alliance. (2002). 2002 Special 301 Report: People’s Republic of
China.
Between 1998 and 2000, China claims to have seized more than 54 million pirate
music CDs (IFPI, 2002). According to the 2001 IFPI report, audio piracy is rampant in
China, with illegal recordings accounting for more than 90% of the market (IFPI, 2001).
Anti-piracy action has had an impact on Shanghai, where piracy at the retail end has been
reduced to a manageable level (IFPI, 2001; IIPA, 2002). Nevertheless, the recording
industry is now plagued by Internet piracy. There has been an increasing number of sites
hosted on Chinese servers containing MP3 files that infringe on copyrights. Also, file-
sharing services based in neighboring Asian countries have established a number of
mirror sites in China, raising great concern (IIPA, 2002).
While most business software piracy occurs at the corporate end-user level,
counterfeiting of enterprise software and hard disk loading are also major problems in
China (IIPA, 2002). According to the Business Software Alliance (BSA) 2001 report,
software piracy rate in China increased to 94% and its retail revenue lost to piracy
reached $1.2 billion in 2000 (BSA, 2001). Another major concern about software
counterfeiting is the increase of exports. Now it is well known that some of the most
2
The estimated losses to the sound recording/music industry due to domestic piracy are US$47 million for
2001, and exclude any losses on sales of exported discs, which have decreased substantially in the last few
years. This number is also based on sales at pirate prices. Using a “displaced sales” methodology, the
industry estimate for losses would be US$418.5.


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