People selling counterfeit CD's for profit can now be found on the street
corners of many large American cities, at kiosks in suburban shopping
malls, in high schools, and even at the local gas station.  downloaded
music and re-mixes are now regularly played by the top deejays at many
urban clubs.  Below is more information on this phenomena.  the article
includes a breakdown of the cost structure of a full price $17 CD.  not
surprisingly, the artists involved in creating it receive only pennies.

the commentary following the article is from a Fellow from the Garrett
Theological Seminary on the Northwestern university campus.  Until
recently, Garrett would not make accommodations for students with
disabilities, claiming it was exempt from all civil rights laws because
it is a religious institution.  garrett changed its tune when it was
pointed out that while their argument was correct it would mean that
enforcement of certain civil rights laws could mean that its students
could loose their federal financial aid and the joint degree program with
Northwestern might end if it maintained its position.  While passably
accessible, Garrett is still an unwelcoming place for people with
disabilities.  Ethics and values run both ways.  the author should live
up to our society's ethical standards and values of fairness and equality
before he preaches to others about their behavior.

Kelly



Counterfeit CDs score big on black market

March 3, 2002

BY ANDREW HERRMANN
STAFF REPORTER

When police raided a Mundelein apartment recently, they confiscated about
8,000 illegally made music CDs--a huge pile of proof that America's CD
pirates are going pro.

The music industry already is feeling victimized by the millions of
Americans who download music from the Internet for free or burn new
copies of CDs--one at a time--for themselves and friends. But as the raid
in Mundelein seems to show, CD piracy is now going wholesale, with
thieves illegally cranking out thousands of counterfeit CDs and selling
them for big profits on the black market, at places such as flea markets
and gas stations.

"Nobody was paying nobody for nothing,'' said Mundelein police Sgt. Paul
Werfelmann of the Mundelein bust, in which police confiscated
Spanish-language compilation discs and counterfeit copies of mainstream
acts such as 'N Sync and the Backstreet Boys. Police also seized
electronic equipment designed to reproduce CDs and high-quality printers
for reproducing CD covers.

PRICE BREAKDOWN

Here's where your $17 goes when you buy a CD:

* Retailer: $5

* Record label: $4.92

* Distributor: $2.40

* Giveaways: $1.80

* Duplication/recording: $1.10

* Artist royalty: 83 cents

* Songwriter license: 60 cents

* Producer royalty: 27 cents

* Musicians union: 8 cents

SOURCE: Confessions of a Record Producer (Backbeat Books) by Moses Avalon

In the first six months of 2001, the most recent figures available, the
Recording Industry Association of America tallied 1,700 arrests--up 89
percent from the same six-month period the year before--and the seizure
of 1.2 million illegal CDs--up 133 percent. About 72 illegal distribution
centers and 34 outlaw manufacturing operations were raided. The first
half of 2001 also saw seizures of 604 high-volume CD-R burners, about
equal to the total number of burners seized in all of 2000.

Rip-off recordings have been around since Elvis and his hound dog. But
where once a pirate needed considerable space and equipment for pressing
vinyl records, today's technology can turn a kitchen into a printing
plant, said Frank Creighton, director of anti-piracy for the RIAA.

A pirate in the '70s, for example, duplicating Led Zeppelin's "Houses of
the Holy" for sale on counterfeit cassettes, would have needed about
$200,000 worth of equipment and factory space, Creighton said.

Now, the necessary equipment can be had for $2,000 or so.

"In the cassette days, you might have a couple dozen [pirates] in a major
city. Now, you've got 40 or 50 smaller operations'' in major metro areas,
he said.

The counterfeit CDs end up for sale at gas stations, festivals and flea
markets, and on the Internet. An investigation in late January by Gurnee
police, acting on a tip from Sony Music, busted the operator of a kiosk
at Gurnee Mills mall for selling pirated compilation CDs that included
hits by R&B artist Destiny's Child and rapper Memphis Bleek, Detective
Jesse Gonzalez said.

Last month, New York City police confiscated 17,000 counterfeit discs
worth $500,000 from two Harlem apartments.

Last summer, illegal manufacturing operations were shut down in
California, Connecticut and Texas.

One record store in Texas had machinery capable of producing 75,000
pirate CDs a year, according to the recording industry association.

In the Mundelein case, Geremias Revilla-Santiago, 33, and Norma
Garcia-Navarro, 31, were arrested and charged with a Class 4 felony. If
convicted, they would face one to three years in prison and fines up to
$250,000.

The CDs sold for $6 each, about $10 less than legal recordings. The pair
allegedly sold the CDs pri- marily to small stores, Mundelein police
investigator Marc Hergott said. He put the value of the confiscated CDs
and equipment at $150,000.

The RIAA has investigators working in at least a half dozen cities.
Chicago operations, in which investigators comb stores and follow up on
tips--often from resentful retailers trying to sell CDs at retail
prices--is headquartered in Oak Brook.

The RIAA reported a decline in music sales of almost 10 percent in 2001,
which it attributes largely to music being ripped off through the use of
technology. Last year, blank CDs outsold all music albums in the United
States for the first time.

Primarily, the thieves are individuals downloading tunes off the Internet
for their own use. Ownership of CD burners has tripled since 1999.

But the industry also is combatting for-profit pirates who are copying
CDs in schemes like the alleged operation in Mundelein. Some but not all
rip-off CDs--called CD-Recordables or CD-Rs--are distinguished by their
coloring: gold on one side and a greenish tint on the other. Some bogus
CDs are of poor quality, but some are very professionally done.

While the industry chips away at domestic pirates, the problem overseas
remains a stubborn one.

RIAA President Hilary Rosen testified before the U.S. Senate Foreign
Relations Committee that in Russia, China and Brazil, the world's three
leading pirate marketplaces, the industry loses $1 billion per year.

"Piracy is not a private offense,'' Rosen said. "It hurts everyone by
diminishing the incentive to invest in the creation of music. It should
not therefore be viewed as a crime only against authors, performers,
composers, musicians, record companies, distributors, wholesalers and
retailers, but against each of us.''

3.6 billion illegal downloads a month

Three computer-savvy college students got an odd request from the music
industry: Rip us off.

They were instructed to download as much music as they could in two days.
Hired by the folks who put on the Grammy Awards, the trio grabbed 6,000
songs off the Internet.

"That's three kids, folks,'' National Academy of Recording Arts and
Sciences CEO Michael Greene said Wednesday. "Now multiply that by
millions of students and other computer users, and the problem comes into
sharp focus. Songwriters, singers, musicians, labels, publishers. The
entire music food chain is at serious risk.''

An estimated 3.6 billion songs are illegally downloaded each month,
according to the Recording Industry Association of America, which
represents most record companies. Illegal Web sites allow people to swap
music files.

While the music industry works to combat the scourge of professional
pirates who duplicate CDs or make best-of compilations, a worse problem
is amateurs who swap music files on the Web.

Some who download say they are protesting the high cost of CDs (though
the music industry says it loses money on 85 percent of its releases).

Other computer music swappers argue that downloading allows potential
customers to listen to music they are interested in before they shell out
the $16 to $18 for a CD.

In a study commissioned by the RIAA, Peter Hart Research Associates
reported that of 2,225 music consumers between the ages of 12 and 54, 23
percent said they are not buying more music because they can download it
or copy it for free on the Internet.

"Ripping [music files] is stealing [musicians'] livelihood one digital
file at a time,'' Greene said.

Consumers can legally make copies of recordings they own for their
personal use. However, it is illegal to sell copies or to give them to
someone else to copy, either physically or on the Internet. Criminal
penalties for copyright infringement include up to six years in prison or
up to $250,000 in fines, or both.

Little can be done to stop consumers from "ripping,'' or digitally
copying, the hundreds of millions of old CDs already on the market.
However, technology designed to thwart copying is being introduced on
some new CDs. That technology inserts audible clicks and pops into music
files that are copied from a CD onto a computer.

The controversy over CD makers' disclosing the CDs' limitations has led
to at least one lawsuit, settled last week.

Makers of a Charley Pride CD have agreed to warn consumers that it's not
compatible with computer CD-ROM drives or DVD players.

Marin County, Calif., music lover Karen DeLise was upset after she
discovered her new ''Charley Pride--A Tribute to Jim Reeves'' CD
contained a copy protection scheme from SunnComm Inc. that prevented the
disc from being played in her PC. The technology deters consumers from
swapping music over the Internet or making unlimited copies of a CD for
car stereos or portable MP3 music players.

DeLise sued SunnComm and the record's distributors, independent record
label Music City Records and Fahrenheit Entertainment, in September,
claiming they failed to put an adequate disclaimer on the CD's package.

As part of the settlement, the CD's makers will provide a more detailed
disclosure on the package.

Andrew Herrmann

Legalities aside, copying puts you on slippery slope

BY KEN VAUX
SPECIAL TO THE SUN-TIMES

Sometimes on Sunday mornings, shoppers swarm to a certain stall on
Maxwell Street. On this particular Sunday, I joined the rampage to find a
table piled high with CDs--really good ones: U2, Kiss, Outkast--$3 each.
As a young woman shoveled dozens into her shopping bag, it became clear
that these were pirated discs--near perfect in sound and cover.

Until now confined to China's amazing cloning factories, where any
item--medicines, commodities, watches--could be replicated for a dime on
the dollar, CDs are now copied in the United States as easily as Napster
music downloads. In Evanston and Lake Forest, they are sold in the
corridors of Evanston Township and New Trier high schools--to be
circulated through the rooms of affluent North Shore teens. Pondering the
ethics of such disc-clipping puts one on as slippery a slope as that
precipitous tunnel of Utah's Olympic luge.

How does CD piracy weigh on a scale of justice? St. Augustine contends
that every evil is an inverted good. At a base level, the action we
ponder involves a good, even obligation.

A noble purpose first appears in the act of copying, borrowing, sharing.
An illuminated manuscript is faithfully copied by hand in Cluny's
scriptorium so hungry monks at a remote monastery might be spiritually
fed; a Beatles song is taped from the car radio to share with a sick
friend. A newspaper editorial is "Xeroxed" for a class discussion.

The "good" of sharing, warning, relaying is the ground of our
transmitting vocation in Jewish Torah, Christian proclamation and Islamic
Jihad. Passing down our culture is an obligatory act, the substance of
our common humanity.

But with just a slight slide, copying becomes objectionable. Like a lazy
student lifting from a borrowed research paper, historian Doris Kearns
Goodwin scissors and pastes her way to embarrassing disgrace by quoting
without attribution. When copying is unauthorized or used exploitatively,
or when one's motive slip-slides from helping and sharing to
self-aggrandizing and self-profiting, praiseworthy acts become
blameworthy. When businesses such as Microsoft resort to "homeland
security" to lock in their privilege, or when artists or authors are
impoverished by a thousand middlemen rake-offs, the koinonia--that is to
say, the shared community--of human exchange is devastated.

Good is finally twisted into evil when another person's work is co-opted
by profiteering. Conscience and community are offended, and acts should
be outlawed as they become sin, vice and crime involving stealing,
slavery, oppression.

Property rights and notions of "intellectual property" are grounded in
the latter commandments: "Do not steal or covet" (Commandments 8, 10).
Societal maxims and laws derive from these "heavenly mandates"
(Confucius). We either respect or exploit the creative work of others.
The common good hangs on this.

When we coerce others to work for our own good; when, through a system of
global economic injustices, we force a nation's economy to grow poppy
(Afghanistan) or mine black steel (Nigeria: for cell phones) oppression
proceeds to spoil the human community.

Pirating CDs moves in this direction. Obviating and obliterating the work
of others is a grievous wrong.

People have rights to the "work of their hands." Only thus can privilege,
the risk of freedom, translate into participation, the gift of freedom.

The chinks and impediments to copying proposed last week are valid to
protect ownership, but free-flow within those constraints should be
encouraged.

P.S. I didn't buy the CDs--they were all gone.

Ken Vaux, emeritus ethicist at the University of Illinois at Chicago, is
now fellow at the Center for Ethics and Values, Garrett-Evangelical
Theological Seminary/Northwestern University .


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