Brazil Copyright Piracy: "ISTO E DINHEIRO"

UNCLAS SECTION 01 OF 02 BRASILIA 000239

SIPDIS

STATE FOR WHA/BSC, EB/TPP/MTA/IPC:SWILSON
STATE PASS TO USTR FOR SCRONIN, LYANG AND BPECK
USDOC FOR
4322/ITA/MAC/WH/OLAC/WBASTIAN/JANDERSEN/DMCDO UGALL/DRISCOLL
USDOC FOR 3134/USFCS/OIO/EOLSON/DDEVITO
NCS FOR DEMPSEY

E.O. 12958: N/A
TAGS: KIPR KCRM PGOV ECON BR IPR
SUBJECT: Brazil Copyright Piracy: "ISTO E DINHEIRO"
ARTICLE ON NEW LOW-COST CD

REF: 04 BRASILIA 2557


1. The January 26 "Isto E Dinheiro" article set forth in
paragraph 2 (below) describes a low-cost CD alternative
that its inventor hopes will put Brazilian piracy out of
business.


2. Begin Unofficial Embassy Translation

Headline: Ralf, the Saviour?

A low-cost CD with only three tracks and cardboard cover.
That's how country singer Ralf promises to end the pirates'
party.

Brazil was once the sixth largest phonographic market in
the world. Now it's in 12th place. In the last three
years, two thousand points of sale for CD's were closed,
half of the jobs directly linked to the music industry
disappeared and, in 2004 alone, the damages to the sector
reached US$250 million. The villain in this story can be
found on almost every corner: the CD pirate, who sells 60%
of the CD's sold in the country. That's the version told
by the recording companies who won't admit that charging 30
Reals for a CD has something to do with the problem. In
any case, Ralf, of the duo Chrystian & Ralf, says he has
the solution. He invented the SMD (Semi Metallic Disc),an
alternative to the conventional CD that plays on any
equipment and is cheaper than the pirated version. "I
would be very proud to arrive in the USA and tell them that
a Brazilian put an end to piracy", said the father of the
idea.

Ralf already invested 3 million Reals in the project. The
secret of the low cost of the SMD, which will be sold at 4

SIPDIS
Reals, is in the number of songs "injected" and the
packaging. He stores from three to seven tracks (why have
more if people buy a CD because of a hit they hear on a
soap or the radio?) and that's why the metal part of the
disc is smaller. What's left over is a plastic
circumference where the technical information of the work
is printed. In this way, the insert can be eliminated as
well as the plastic box, substituted by a cardboard cover
with the words to the music and artist's photo.

"No one buys pirated products because they like to. The
only way to complete with pirates is with price", said
Cristina Monteiro, director of producer Radio Media System,
who bought the license to manage the SMD patent for ten
years. The new CD isn't equipped with a security system
that prevents production of homemade copies. "But it's not
worth it, because it's cheaper than the pirated version
without being pirated and has the quality of an original
CD. Besides, the price is printed on the cover so the
vendor can't increase the price," said the executive.

The first artists launched will be country duos Marcelo &
Gabriel and, of course, Chrystian & Ralf. Afterwards,
other styles, like rap and gospel music, will follow.
There are also SMDV (film storage) and SMDG (games)
projects. Expectations couldn't be more optimistic.
Cristina forecasts that by 2008 the SMD will capture 40% of
the national market. And that piracy will fall to 20%.

End Unofficial Embassy translation.


3. Comment. While the SMD may offer an interesting vehicle
for delivering low-cost music to the economically
disadvantaged - which are a large portion of Brazil's
population given the country's 30 percent urban poverty
rate - it's questionable that the mainstream music market
will embrace the three track per disc limit, among other
features. However, pricing, as providing an incentive to
purchase pirated goods, is a topic Brazil's new National
Council to Combat Piracy and Intellectual Property Crimes
is expected to discuss in coming days.

Danilovich