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. Last Updated: 07/27/2016

Officials: Pirated CD Market to Stay

Attention all shoppers, Gorbushka is not being closed.

Russian papers hurried to reassure their readers this week that the infamous hive of video and CD piracy in Moscow would remain open, despite previous news reports to the contrary.

"The Minister of Internal Affairs, [Vladimir] Rushailo, visited the market Saturday and reassured people that [the authorities], in general and particular, would not close the market," Segodnya newspaper reported in its Tuesday issue.

Whatever the fate of their beloved Gorbushka market, Russians remain decidedly indifferent about the issue of intellectual property and piracy.

For most of the eight years since the Soviet collapse, piracy of Hollywood videos, Western pop music and software has irked foreign corporations, while Russians shrugged and kept buying CDs and videos for the equivalent of $2.50.

"If there were no pirated CDs, I'd have to give up buying music because I can't afford to pay for licensed copies," said Denis Vlasov, a local jazz musician, voicing a common sentiment.

Estimates of the copyright holders losses to piracy in Russia run into the hundreds of millions, and even billions of dollars. Up to 90 percent of CDs sold in Russia are pirated copies, according to recent statistics from law enforcement agencies.

A recent broadcast of "Protsess," or "On Trial," on ORT television was dedicated to the question, "Should Russia Fight Against Piracy?" In a call-in poll, 7,804 people responded "no," with only 3,420 responding "yes."

The promoter for Na-Na, a popular local pop group, whose disks are regularly targeted by pirates, appeared on the show as a witness for the defense, arguing that pirated CDs amounted to free advertising that helped pack concert halls for the group's live performances.

Nonetheless, attitudes appear to be changing - at least among the Russian authorities, after years of complaints by foreign industry groups.

In the past year, a number of anti-piracy units within the Tax Police and Ministry of Internal Affairs have been created to battle copyright and trademark piracy, often in cooperation with foreign industry groups.

The government has also instituted a licensing requirement for domestic CD manufacturers, which it started enforcing last year on the basis of a 1998 law.

In a more controversial move, the Moscow city government has introduced a stamp for video and audio products, which is supposed to guarantee the productsare not pirated copies.

Critics in the music and film industry charge it amounts to an excise tax, and does little to help copyright holders.

Chris Merchant, the coordinator of anti-piracy enforcement for IFPI, an international record-industry trade group based in London, said during a recent visit to Moscow that authorities had effectively contained the country's piracy problem.

"Russia has a big internal problem with piracy, but it is less of an exporter of pirated CDs than some other [Commonwealth of Independent States] countries, such as Ukraine, which is totally unregulated," he said.

"The Russian authorities can be quite efficient when they want to be," he added.

Producers, both licensed and unlicensed, are another question.

"I wouldn't say any CD producers are ready to move towards legal production," said Igor Avcharov, head of the Russian MVD's newly created "R" anti-piracy unit.

Mikhail Sukhodolsky, of the Internal Affairs Ministry's economic crimes department, said even licensed producers often engage in piracy by manufacturing more CDs or videocassettes than stipulated in their contracts with copyright holders.

Higher profits are the prime motivation.

"The profit margins in this market [for pirated music and videos] is approximately 50 percent on all levels, including manufacturers, distributors, and sellers," Avcharov said.

Despite the seizure and destruction of hundreds of thousands of pirated CDs and videocassettes, piracy continues to thrive.

Vlasov, the musician, said selection and quality of pirated CDs has reached new highs.

"It used to be you had to pay for a licensed disk if you wanted to listen to something besides the latest pop hits, but now everything's available," he said.

"I've even started selling my old licensed CDs so I can get more money to buy pirated music at Gorbushka with," he said.