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China Music Industry Eyes Internet Piracy Threat
BEIJING (Reuters) - Piracy of Chinese popular music on the Internet is a new but fast-growing threat to an industry already reeling from one of the worst rates of CD counterfeiting in the world, China music business experts said Thursday.

"The old threat of piracy on the streets now rears its head on a new playing field: the Chinese Internet," said David O'Dell, head of, one of China's top rock Web sites.

O'Dell gathered musicians, record label owners and Internet executives in a Beijing rock club in order to hammer out an industry response to the nascent threat of piracy on the Internet through digital formats such as MP3.

"The MP3 problem is not as bad as street piracy, and we want to keep it that way," he said.

Rampant piracy of music CDs and video discs brought China and the United States to the brink of a multi-billion dollar trade war in 1996, but China's own fledgling pop music industry has been all but crippled by counterfeiting.

Seminar panelist Zhang Youdai, popular disc jockey at Beijing Music Radio, cited official figures showing 93 percent of all music sold in China was pirated.

The MP3 format, which enables digital audio material to be compressed into compact file sizes and transmitted on the Internet or burned on to recordable CDs, is popular on U.S. college campuses but has only started to take hold in China, Zhang said.

"It does not pose a fatal threat to the Chinese recording industry yet, but based on the experience of CD piracy it will in 10 years if we don't come to grips with it," he said, adding that authorities and the industry were slow to act on CD piracy.

O'Dell showed dozens of Chinese Web sites he said promoted links to pirated music and said Internet portal servers were often unaware of their role in the problem. Musicians themselves were stunned to learn how easy their works was stolen, he said.

Internet use in China is mushrooming, with the current four million users expected to increase tenfold in five years.

Record label executive Huang Feng told the gathering that for every one legitimate CD his Jing Wen Records puts out, seven or eight pirated versions circulate in the alleys and tiny shops of China' cities.

"Sometimes the pirated versions are better than the real things," he said of the growing sophistication of music pirates.

Revenues forfeited to piracy hurt record labels, crimping their ability to sign promising new acts or launch tours to promote artists, Huang said.

Unlike many of their mega-rich Western counterparts whose works are pirated and flogged in China, where the market remains tiny, counterfeiting chokes Chinese rockers in their main market.

"It definitely hurts our income and our livelihood," said Fu Ning, guitarist for the popular Beijing hard-rock band Shou Ren (Thin Man).

The Chinese government had not revealed plans to regulate on-line pirated music and the fast-growing Internet sector in China was wary of courting state interference, O'Dell said.

Anti-piracy activists in China, however, have looked with interest to the United States, which in 1997 implemented the No Electronic Theft (NET) Act, which makes it a federal felony to distribute copyrighted work without permission, even if the work is not being sold.

On August 20, a University of Oregon student became the first person convicted under the NET act after he pleaded guilty to allowing access on his Web site to thousands of pop songs in MP3 format. He faces three years in jail and a $250,000 fine

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