Table 7.3 Percent Change in Size of the US Recording Industry, 1977–1982
Difference between 1977 and 1982 (%)
Number of employees
−25.97
Payroll amount
+19.38
Value added by manufacturing
+63.55
New capital expenditures
+22.15
Source: US Department of Commerce, 1977 Census of Manufactures, Volume II: Industry Statistics, Part 3. SIC Major Groups 35–39 (Washington, DC: US Government Printing Office, 1978), 36D–20; US Department of Commerce, 1982 Census of Manufactures: Subject Series General Summary, Part 1. Industry, Product Class, and Geographic Area Statistics (Washington, DC: Bureau of Census, 1982), 1–16, 1–17.
By 1985, these legal efforts began to show scattered success. Singapore won the title of “biggest pirate” in the international press, as the Economist claimed that the small island nation produced $150 million of bootleg tapes—half of an estimated $300 million world market. Despite this sizable output of illicit music, the first notable victory for outside copyright interests did not actually deal with recordings. Rather, a group of British publishers won a judgment against a bookseller, Ng Sui Nam, for selling copies of books originally published in the United Kingdom by the Royal Academy of Music, among others. The Singaporean court ruled that British copyright law was still in force in the city-state, even though it had gained independence from the United Kingdom in 1963. Antipiracy campaigners thus turned to a vestige of colonialism to prop up their claim to protection in Singapore, which had not yet fully recognized copyright protection for foreign works. At the time, the US government of Ronald Reagan joined European powers in urging Singapore to pass tough new legislation and join the Berne Convention or another treaty. The ruling was an early sign that Lee Kuan Yew’s government might be ready to play by the West’s rules. “Singapore wants eventually to become a net exporter of information,” the Economist noted, “but in the meantime it wants to continue to import knowledge on the cheap.”55
Government and business groups began to make some inroads in foreign pirate markets, particularly in East Asia, during the 1980s. Chemical giant Monsanto happily reported that Taiwan was exporting fewer bootleg insecticides, while the government cracked down on factories that imitated General Motors auto parts. Indonesia banned pirate tapes in 1988, giving in to pressure from the United States and the European Community, and it agreed to adopt a patent law the following year. Indonesians swamped the markets in Jakarta to snap up tapes before the cassette ban went into force in June. “Our sales have tripled,” Andi Suhalan said of his music store. “Some people are buying 40, 50, or even 100 tapes at a time.”56
One wonders what a customer planned to do with forty copies of Thriller. The Europeans demanded to know how the local tape producers would dispose of an estimated three million tapes remaining in stock, as well as two million that had already shipped to the Middle East. Whenever new laws were enacted, the same problem arose: how could the traces of such a widespread practice as bootlegging be scrubbed from everyday commerce, even if local authorities genuinely wished to do so? “There may still be some unauthorized reprints in the bookstores or pirated cassettes in video stores, but they are disappearing,” trade negotiator Hwang Doo-Yun said of South Korea. “It still takes time to educate our people.”57
Taiwan, at least, seemed to get the message. In 1989 the Wall Street Journal observed approvingly that retailers in Taipei’s shopping areas stopped openly selling counterfeit Rolex watches, although knock-offs of Gucci and Polo remained available on the street. Many upwardly mobile Taiwanese chose to buy legitimate goods in department stores such as Sogo and Sunrise, but rising affluence did not push bootleg products off the market entirely. Three main steps moved Taiwan and other countries toward compliance. First were the aggressive investigations funded by foreign companies. Apple Computer, for instance, hired a former narcotics agent to spearhead an operation against imitators who gave their knockoffs cheeky names like “Orange” and “Pineapple,” setting up fake businesses and hiring local people to pose as buyers of pirate goods, thus ensnaring sellers in criminal transactions and raids. Apple’s elaborate stings in Taiwan in many ways resemble the FBI’s ruse of setting up the Modular Sounds record shop to bust pirates up and down the East Coast in 1978.58
Antipiracy campaigners then had to pool their resources and organize to attain political clout in the developed world. Whether they made computers, pharmaceuticals, or sound recordings, corporations shared not just tactics but a larger interest: protecting all their products under the umbrella of “intellectual property.” Though they did not create the term out of whole cloth, it was still fresh enough in 1989 for the Wall Street Journal to refer to “a continuing U.S. war against thievery of so-called intellectual property.”59 Indicative of this shift was the formation in 1984 of the International Intellectual Property Alliance (IIPA). The group melded together a range of interests, including the Association of American Publishers, the Business Software Alliance, the Entertainment Software Association, the Independent Film and Television Alliance, the Motion Picture Association of America (MPAA), and the RIAA.60 A revolving door developed between the executive branch and industry. Gerald Mossinghoff, for instance, was both an assistant US trade representative and assistant secretary of commerce before heading the lobbying group Pharmaceutical Research and Manufacturers of America (PhRMA); the group was later led by former Louisiana congressman Billy Tauzin.61
Once constituted, these groups pressured the US government to take up the cause of intellectual property worldwide. Lobbyists rallied together to awaken uncomprehending minds in Washington to the importance of preventing handbags, records, and pills from being copied around the world. Working for Monsanto in the late 1970s, Jim Enyart found that some government officials did not believe that issues of copyright and patent belonged in international trade negotiations. “Everyone said: ‘Oh gee, patents are highly technical, very esoteric things. What do they have to do with trade?’” he said. “And we pressed them and said: ‘Look, intellectual property is property. It costs money and time to create; it has commercial value, and if people steal it, it’s like stealing any other kind of property.’”62
Meanwhile, companies such as Chanel, Gucci, and Izod banded together in 1978 to form the International Anti-Counterfeiting Coalition, which aimed to get the matter of trademark protection into the Tokyo Round of negotiations over the General Agreement on Trade and Tariffs. (The GATT system was established after World War II to foster international exchange by reducing tariffs and other barriers to trade.) The Tokyo Round ended in 1979 without attending to the intellectual property issue, but the copyright, trademark, and patent forces were sure to press on when new negotiations began in 1982.63 By 1989, the Reagan administration had “more than a dozen senior officials in the White House and the State and Commerce departments” working on intellectual property negotiations around the world, according to the Wall Street Journal.64
The United States and its allies forced copyright onto the agenda of trade negotiations in the face of stiff resistance from developing countries. Indeed, poorer nations showed much greater willingness to fight the extension of copyright as a group than, say, Singapore or South Korea did in individual negotiations with the United States or United Kingdom. Argentina, Brazil, Egypt, India, and Yugoslavia held to their opposition during talks in 1985, while President Reagan warned that the United States would press for greater copyright protection in bilateral negotiations if GATT did not provide adequate progress. In 1986 the United States and Japan proposed that GATT take on the issue of intellectual property as a whole, not just counterfeit goods in particular. This time, a “group of 10” stepped forward and argued that intellectual property was not any of GATT’s business; the faction consisted of Argentina, Brazil, Cuba, Egypt, India, Nicaragua, Nigeria, Peru, Tanzania, and Yugoslavia.65
Intellectual property was a fundamentally new cons
ideration for GATT, whose main purpose over the years had been to prohibit restrictive trade practices. Member countries agreed to lower tariffs and avoid discriminating between trading partners, but they could regulate their domestic economies as they wished—including matters of intellectual property enforcement.66 Thus, the “new issues” of the Uruguay Round, such as copyright and trade secrets, were an extension of the push for active enforcement of property rights in the United States during the 1980s. The US strategy was clear: offer developing countries tariff reductions and access to its markets and services in exchange for enforcement of intellectual property rights abroad.67
The Uruguay Round negotiations ran into several dead ends between 1987 and 1994, but the Americans’ determined lobbying ultimately produced the Agreement on Trade Related Intellectual Property Rights (TRIPS). Many leaders in developing countries remained unconvinced that curbing piracy was in the best interests of all, believing that antipiracy measures would privilege American corporations and inhibit their own development. The stubbornness of both sides in the debate stalled progress, as everyone argued over the basic premises of the negotiation. The Americans threatened to push bilateral deals across the board if talks at GATT failed. The process broke down in 1990, but GATT director-general Arthur Dunkel revived it the following year with a new proposal, the so-called Dunkel Draft, which lowered tariffs on a wide variety of goods and mandated stronger protections for intellectual property.68
By this time, resistance to the prospect of a new intellectual property regime had softened somewhat. Leaders in the developing world began to see that multinational corporations looked favorably on nations with better intellectual-property protections as candidates for investment, and GATT officials believed that poorer countries were willing to accede to US demands to keep the North American giant at the negotiating table. Concessions on intellectual property could be a reasonable price to pay if the United States reduced barriers to foreign agricultural products, textiles, and other goods.69
Ironically, business interests in the United States began to have their own doubts by 1990. Some in the American entertainment industry worried that Dunkel’s proposal would prove less effective than bilateral negotiations, which had allowed the United States to pressure other nations into accepting its terms of intellectual property protection. Movie studios complained that the agreement would allow the French to use levies on blank tapes to subsidize their own national film industry, and they also viewed the European practice of setting 51 percent of television time aside for European programs as a restraint of trade.70 Jack Valenti, the tireless MPAA campaigner, did not sleep for three days and even went a day without eating as he fought such provisions. “If these quotas exist,” he said, “this is Armageddon time. I’m on the Hill in a New York minute bringing out every patriot missile, every F-16 in our armory, leading whatever legions we can find to oppose this agreement.”71
Despite these “North-North” struggles, the so-called South still saw the Dunkel Draft as a victory for intellectual property interests in the First World. The proposal required developing countries to accept the fundamental premise that copyrights, patents, trademarks, and trade secrets deserved protection throughout the world. It required them to develop procedures for enforcing property rights that were more efficient than the legal mechanisms antipiracy campaigners had encountered in countries like Pakistan and Nigeria. The agreement also urged customs officials to hold on to pirate goods seized at borders and stated that piracy “on a commercial scale” should be treated as a criminal, rather than a purely civil, offense. Finally, the deal went beyond setting standards for copyright law, which some countries might formally adopt but fail to carry out. The agreement set up a Dispute Settlement Body that would handle cases of alleged noncompliance through the World Trade Organization (WTO), a new body established to weigh trade disputes between nations.72
The Dunkel Draft also contained concessions to various interests in the developed countries. The United States insisted on an exception to the mandate for “moral rights,” a European concept that recognized the inherent right of an artist not to see his work altered, even when ownership of the work changed hands. The American model of copyright included no such right, allowing whoever purchased the rights to control the fate of the work in question, regardless of the wishes of the original creator. Japan also managed to include in TRIPS an exception for its popular system of renting compact discs. The United States had banned rental of sound recordings (1984) and software (1990), but in Japan, music rental shops were commonplace.73
Developing nations, particularly Brazil and India, attempted to limit the new agreement’s effect on their economies. While acquiescing on the basic issue of intellectual property, the developing bloc pushed for differential treatment for poorer countries and the most limited standards in matters of copyright, patent, and trademark. India’s prime minister Narasimha Rao faced political risks at home; while the Americans pushed tough international standards, many Indians opposed any compromise in the country’s position on intellectual property. Everyone from the Communists to the conservative Bharatiya Janata Party viewed the agreement as bad for the country.74 Though it still raised the ire of many Indians, the Dunkel compromise ceded some ground to critics. TRIPS provided a multitiered system of compliance in which most developing nations would have five years to conform their legal systems to the new standards, while the poorest countries would have a ten-year period to update copyright laws and enforcement mechanisms.75
Rao was not the only head of state to worry about getting the result of the Uruguay Round approved at home. President Bill Clinton also contended with enemies on the left and the right when the agreement reached Congress in 1994. Conservatives Patrick Buchanan and Senator Jesse Helms worried about ceding sovereignty to the WTO—or any other international organization, for that matter—while labor unions, environmentalists, and consumer advocates warned that the WTO could strike down economic regulations as unfair restraints on trade. Hollywood was disappointed with the pact, despite the provisions that bound developing nations to protect its intellectual property, in large part because Europeans retained the right to limit broadcasts of foreign television.76 California’s Republican governor, Pete Wilson, faxed a warning to Clinton: “We must walk away from a bad GATT agreement.”77
The measure passed because of several factors, not the least of which was a concerted, focused effort by other business advocates to cement the gains made during the Uruguay Round. Pharmaceutical lobbyist Gerald Mossinghoff described the operation as “a full-court press,” with daily lobbying of senators and representatives. Although some liberals were uneasy with the direction of US trade policy, GATT had the support of every key Democrat—the House and Senate majority leaders, the Speaker, and the president—and Clinton’s energetic support helped ensure its passage. If nothing else, certain doleful Democrats could vote for the Uruguay Round Agreements Act when it passed in December 1994, fearing no further electoral consequences. The Republican Party had swept the elections in November, and many Democrats would not be returning to Congress in 1995.78 “It wasn’t a huge fight,” recalled Clinton aide George Stephanopoulos. “We all had bigger problems after that election.”79
The Persistence of Piracy under the New International Regime
Battles over piracy continued both during and after the passage of TRIPS. Several Asian governments scrambled to do more to curb piracy as the diplomatic debate remained unresolved in the early 1990s, because the United States was determined to enforce property rights one way or the other, within GATT or without. “Southeast Asian countries are worried about the Clinton stand,” an official for the record company EMI (Asia) said in 1993. “A year ago piracy was a disaster. Now I think we are rounding the corner.” That year Thailand fired the director of the antipiracy agency that had been set-up under US pressure in the 1980s. He had been doing too little to stifle the illicit trade. Taiwan was still raiding pirate factories, capturing 16,000 co
mpact discs in February 1993. Bilateral negotiations with South Korea were also making progress.80
However, the battle lines shifted once again, as the antipiracy campaigners encountered a foe that was much harder to push around than Singapore or Thailand: China. The IFPI warned in 1994 that China’s pirate factories could produce 60 million recordings a year, a number so great that the Chinese could export bootleg discs and tapes throughout the region.81 The turnabout was ironic: Hong Kong and Taiwan had exported bootleg music to China in the 1980s, and now the People’s Republic was providing Hong Kong with the illicit records it could no longer produce. By 1995 the Economist claimed that China consumed 25 percent of the world’s bootleg discs, and many of its pirated discs ended up in Hong Kong, where authorities had worked hard to curb domestic piracy.82
Despite their political accomplishments, antipiracy crusaders failed to strike a decisive blow against the global illicit market. Yes, many countries had signed on to the 1971 Phonograms Convention. Interpol (ostensibly) joined the fight against audiovisual piracy in 1977. The United States passed one tough copyright law after another and persuaded other countries to do much the same, while the entertainment, fashion, pharmaceutical, and technology industries won the long battle over GATT and TRIPS. They did not, however, vanquish piracy in the developing world. The Economist reported in 1995 that pirate recordings were, at least, “no longer on open display” in Thailand, although a visitor to Bangkok in the early twenty-first century can find pirate CDs and DVDs widely available on the street. In Pakistan, the Economist estimated that 92 percent of 1994 sales were illicit.83 Pakistanis could get the latest Madonna CD for less then a dollar; and if they did not want all twelve tracks by the Material Girl, they could go to a local shop, pick out the songs they liked best, and have a personal CD or tape mixed. These services were affordable, available, and popular, while a legitimate market for music barely existed. Little had changed by the twenty-first century, as the IIPA estimated that 90 percent of recordings sold in the country during 2003 were illegitimate. “There are no legitimate licensees producing in Pakistan,” an IIPA report said, “or licensed to produce such product in Pakistan … Legitimate domestic demand in Pakistan is dwarfed by the number of discs being produced, meaning Pakistan’s production is destined for export.”84
Democracy of Sound: Music Piracy and the Remaking of American Copyright in the Twentieth Century Page 28