Music business calls on the Union to defend its interests

Date: 25/07/1996

IT may seem incongruous that Brussels, home to institutions and Eurocrats, hosted the first-ever platinum music awards ceremony this month. But it was no coincidence.

Pop stars and starlets flocked to the city's Albert Hall to win recognition for their outstanding contribution to the EU economy, not from fellow rock gurus, but from European Commission President Jacques Santer.

Sweden's Ace of Base and Australia's INXS were among the 94 groups, each of which sold more than a million copies of a record last year, to receive the honour.

It was a glittering event staged by the International Federation of the Phonographic Industry (IFPI) and one which provided Santer with yet another chance to pose for the cameras with hipper, trendier folk than usual.

But behind the glitz and glamour, a clear message rang through: Europe's music business is of tremendous importance to the bloc. Now worth 10.7 billion ecu a year, it has doubled in size over the past decade, overtaking even the US to become the biggest in the world.

But despite its economic weight, industry representatives feel the Union does not defend their interests.

“Some 300,000 people are employed by this industry, which brings in a huge amount in tax revenue. We think that policy-makers should start to recognise this,” says Arnold Bahlmann of BMG, a subsidiary of the German media group, Bertelsmann.

“Some progress has been made, but when you compare the EU with the US you will see that we have a long way to go.”

A boss of one of the world's largest record companies, he believes the music business has huge growth potential. While the Union's film industry continues to wilt in the face of Hollywood competition, European records and compact discs account for 60&percent; of all the music sold in Europe.

But industry representatives are afraid their success may soon turn sour. World-wide piracy cost Union companies 1.7 billion ecu in 1995 and is likely to do even more damage as digital technology becomes the norm, according to the IFPI.

That is why the EU must demand tougher action against counterfeiters both on its doorstep and further afield, says Bahlmann.

“The Commission has been too soft on China, but also on Italy, which has a piracy rate of 33&percent;,” he says. “As for Bulgaria, we should use all of our bargaining chips to win concessions on this point. For instance, the EU should not go any further with integration until this problem has been sorted out.”

The IFPI goes so far as to recommend that the Union should block Bulgaria's application to the World Trade Organisation until Sofia agrees to clamp down on counterfeiting.

In a letter to External Relations Commissioner Hans van den Broek, the federation accuses Bulgaria - where 80&percent; of records and 96&percent; of compact discs sold are pirated - of causing “major market destabilisation” in Europe.

Bahlmann also wants to see watertight copyright laws put in place to prevent piracy on the information superhighway from eating into his company's income.

“The problem with the information society is that it has grown into a huge system without any controls. So the EU has to make sure that, on the one hand, technical devices are installed to identify users of European repertoire and, on the other, that owners of intellectual property rights are given complete control over their work,” he explains.

“I think that is only fair. Imagine, for instance, if Annie Lennox's work were connected to an advertisement for cigarettes. It would be ludicrous since she has fought so hard in the past to combat smoking, but it would also be possible.”

With talks aimed at further Union tax harmonisation about to begin, the IFPI is pushing hard to win special reduced VAT rates for music products. At the moment, books and films, accorded special cultural status during the last round of negotiations, benefit from low rates in most member states and from zero rates in some.

France has already thrown its weight behind the industry's campaign, insisting that music should also be viewed as art.

But Bahlmann takes a more realistic view.

“I believe that music is a cultural item, but I also believe that we should consider the dire financial situation which exists in many EU territories. I do not think that we will see a change in the near future,” he concludes, showing the fiscal discipline of a German.