Sales Rise for Counterfeit Music, Fashion, Business Group Says

Source: http://www.bloomberg.com/apps/news?pid=20601205&sid=aHL2EEKoF3m0&refer=consumer

By Erik Larson

Oct. 2 (Bloomberg) -- The entertainment and fashion industries are losing battles against pirated media and fake designer clothing, according to a report showing the number of U.S. adults buying such goods rose 4 percent this year.

Illegal copies of songs, films, footwear and other items were purchased at least once in the past 12 months by 22 percent of adults, according the study released today by the U.S. Chamber of Commerce. The ``steadily rising'' figure compares with a rate of 18 percent last year and 13 percent in 2005, according to the report.

The report, based on a Gallup survey of about 4,300 people, shows ``consumers still don't understand the broader implications of piracy,'' Chamber of Commerce IP Director Caroline Joiner said in a phone interview. ``They still think it's a victimless crime.''

Industry trade groups and government agencies have been trying to curtail piracy and counterfeiting though legal action and education, claiming such behavior costs the global economy billions of dollars each year. The chamber's study suggests those efforts are having limited impact, at least among U.S. adults.

The list of items acquired illegally was topped by pirated songs, with the number of adults who admitted to downloading them rising from 5.1 percent in 2005 to 9 percent this year, according to the study. The average offender downloaded 17 songs in the past year, it said.

The Recording Industry Association of America, which represents U.S. record labels, in the past four years has sued about 26,000 people who download music illegally, claiming pirated music costs the U.S. economy $12.5 billion every year. Although piracy is rising, the recording association believes its legal campaign has made a difference.

`Not Satisfied'

``We're not satisfied with the impact we've made so far, but had we done nothing, the situation would be exponentially worse,'' association spokesman Jonathan Lamy said in a phone interview, adding that piracy hasn't been growing as fast as Internet access and capacity.

Pirated music was followed in the survey by counterfeit clothing, footwear and bags bearing phony designer trademarks, with the percentage of adults who buy such goods rising from 3.3 percent in 2005 to 6.2 percent in the past year.

Nike Inc., the world's biggest shoemaker, is one of many apparel companies trying to stop sales of counterfeits. The company's director of global issues, Vada Manager, said the results of the study prove that changing consumer habits is a slow process.

`Prolonged Education'

``We've always said a combination of prolonged education and enforcement is needed to get at the root of the issue,'' Manager said in a phone interview. ``If this survey is done four or five years from now you'll see more impact from education.''

Pirated movies, downloaded from the Internet or bought on street corners, were the third-most-popular category of illegal purchases. The number of adults who admitted to buying such movies during the past year nearly doubled from 3.3 percent in 2006 to 6.2 percent this year, according to the study.

The Motion Picture Association of America regularly sues Web sites that offer illegal downloads of movies. The group's chief executive officer, Dan Glickman, said making it easier to buy movies legally is one way to address piracy.

Legal Options

``As consumer options change and grow our companies are working to provide people with ways to get movies when they want and how they want,'' Glickman said in an e-mailed statement. ``We will continue to try to educate consumers about legal options to get films.''

Almost 90 percent of those surveyed said they believed it should remain illegal to buy counterfeit products, meaning about 12 percent of U.S. adults buy such goods even though they believe it's wrong to do so.

Of those who admitted to buying counterfeit goods, most cited ``easy availability'' as their reason for doing so. The illegal buying was highest in the Northeast, where 31 percent of adults admitted to such purchases, and, at 19 percent, was lowest in the South and Midwest, according to the study.

To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net .

Last Updated: October 2, 2007 00:19 EDT