A report published by the European Union Intellectual Property Office (EUIPO) highlights the substantial losses to the recorded music industry caused by the piracy of Intellectual Property Rights (IPR). The study covered both types of IPR infringement: physical piracy, where the infringing product involves the use of hard media such as CDs or DVDs, and digital piracy. It examined evidence of the recording industry's direct sales of music products to domestic retailers or intermediaries and analysed sales data from the nineteen EU Member States in which 99% of all such EU sales took place during 2014.
The report revealed that Germany and the UK have the largest market share in this sector. In the UK, over half of music sales in 2014 were digital, with combined music format sales worth €1.1 billion. During 2014 the UK recorded music sector lost €49,000,000 in sales due to infringement: 25% in sales of physical formats and 75% in sales of digital formats.
Similar statistics are reported for Ireland, where the absolute value of direct losses due to IPR infringement amount to €570,000 (3.6% of the average industry figures between 2010 and 2014) for the sale of physical recorded music while the loss to digital sales amounted to €1,302,000 (8.9%).
The adverse impact does not end there. The potential damage to future revenues is widespread. In addition to the direct loss of sales in the music sector, there is also the adverse effect to linked sectors of the EU economy i.e. a sector suffering lost sales due to piracy will also likely purchase fewer goods and services from its suppliers, causing sales declines and corresponding employment effects in other sectors, as well as reduced government revenues. In total, the UK estimates losses to record sales due to this piracy to be €78,700,000.
Moreover, the report also covers the lost potential tax revenues on profits of corporations as a direct result of the IPR infringement, which is valued at €4,000,000 across those top nineteen EU Member States. The report estimates the total direct and indirect effects of lost sales due to the IPR infringement at €336,000,000 across those nineteen Member States.
The report is a continuation of a series of studies conducted in recent years by the EUIPO that have revealed the economic burden that IPR infringement represents to specific sectors with similar reports published for the cosmetics, luggage, jewellery, games, sports and, footwear sectors respectively, demonstrating the seriousness of the issue across a multitude of sectors.