Piracy Weapon: Cheaper CDs

Entertainment companies are looking at a new way to combat pirated CDs and DVDs in countries including China, Russia and Mexico – namely, by offering legitimate products at nearly the same price as illegal copies.

Warner Bros. wants to set a DVD release price between $1 and $2 in China, and NBC Universal is considering a similar program in Russia, according to The Wall Street Journal. Meanwhile, the four major music companies have started a program in Mexico to combat the low-priced pirated CDs found on street corners.

Mexico used to be the eighth-largest music market in the world before pirated CDs took away about 60 percent of the market, according to WSJ. A legit CD goes for about 130 pesos, or US$12, whereas a pirated CD goes for about 90 cents to $1.35, the paper said.

In China, an estimated 90 percent of all CDs sold are pirated. In Russia and the Ukraine, the rate is more than 70 percent, according to the International Federation of the Phonographic Industry.

About a month ago, the four global music companies started selling CDs specially made for street markets in Guadalajara for about $4.50. Before, raids were the answer.

“Most of the programs have been enforcement-driven,” IFPI Latin America regional director Raúl Vazquez told WSJ. “Go in with the police, try to clean up the markets, make sure you hit ’em again. That only gives you temporary relief.”

Low-priced CDs have already been tried in Russia and Germany. Some in the industry believe the solution is to offer higher-priced CDs with extra features. Intocable‘s new double album X, for instance, offers a photo album and video. EMI reported 40,000 copies sold in its first three weeks in the U.S., with Mexico sales figures unavailable at the time of the article.

Meanwhile, the film industry believes a competitively priced legitimate DVD will compete with the pirated versions on the streets of China.

“There is a value in legitimacy,” NBC Universal CEO Bob Wright told the paper, “and now we’re going to try to find out what the appetite is of the customer” for the better-quality product.

At least one person, an advertising executive named Chen shopping in Shanghai, told WSJ a legit DVD selling for $2.65 was “still a lot of money” and the legit DVDs don’t offer that much higher quality. The pirated versions are also available sooner because people will sneak video cameras into theatres.

The movie companies think they have an answer for that, too – releasing DVD versions of a new release overseas at the same time as the U.S. theatre debut. Warner Bros. intends to do that with more than 125 movies this year in China including “Batman Begins,” WSJ said.