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For Mexican musicians, a sad song

Piracy exacts toll on an industry with proud past

MEXICO CITY -- They have been compared to the Rolling Stones for their longevity and their legions of loyal fans. They've sold tens of millions of albums in Latin America. Now, the seminal Mexican rock group, El Tri, is getting dumped by its record label. The reason: Bootleggers are the only ones profiting.

Piracy is so rife in Mexico that the vast majority of the band's album sales are illegal compact discs. So although most anyone older than 13 knows the words to ''Que Viva El Rock and Roll," El Tri and its label, a division of Warner Music Group, rarely see a peso from those recordings.

''If we play somewhere on a Friday night . . . by Monday it will be [for sale] in the subway," said Alex Lora, the front man for El Tri. ''It is becoming a way of life."

El Tri may be among the first big Mexican acts to lose a contract to piracy, but it may not be the last. Entertainment bootlegging is sweeping the globe, but nowhere has the landscape changed more quickly than in Mexico. About six of 10 CDs sold are believed to be bootlegs, putting Mexico in the third spot worldwide, behind China and Russia.

But unlike those nations, Mexico has a long-established commercial industry.

Music retailers are closing their doors, as sales last year plunged to $347 million, down 25 percent from 2002, dropping Mexico out of the world's top 10 music markets for the first time in years. Recording industry employment has fallen by almost half since 2000.

Labels are culling their rosters of established acts, and are signing fewer new ones. Pirates have robbed musicians of so many sales that last year, the Mexican industry slashed the standard for granting gold records by one-third to just 50,000 copies -- one-10th of the US threshold.

''It's an economic crisis" for the industry, said Fernando Hernandez, director of the Mexican Association of Phonogram and Videogram Producers, known as Amprofon.

But Mexican consumers say record companies could learn a thing or two from pirates. Bootleggers have been known to provide special orders and speedy delivery that can rival anything from the studios.

''We were always running with shackles on," said Oscar Sarquiz, a former executive with music marketer Columbia House Co., which closed its Mexican operation in 2002. ''You tell the pirates you want to sell the 12 best heavy metal groups, they'll say, 'Here you are.' "

The shadow industry has become a major employer, providing jobs to tens of thousands of itinerant vendors. Mexican artists are wary of complaining too forcefully, lest they be perceived as greedy and indifferent to their struggling fans. Meanwhile, organized crime and corrupt police are profiting.

It adds up to a juggernaut that some fear may be unstoppable. Industry veterans who have watched legal music sales all but vanish in smaller markets such as Paraguay and Venezuela are shaken at the assault on one of the hemisphere's giants.

''If you lose Mexico, you're dooming the industry" for Latin music, said Raul Vasquez, a former recording executive who is now the Latin American regional director of the International Federation of the Phonographic Industry, a trade group battling piracy. ''We're at a very critical point."

Analysts say Mexico's poverty, its sluggish job market, its lax law enforcement, and its 100 million consumers have created a perfect climate for piracy. The country's ubiquitous street markets are crammed with knockoffs of all types of merchandise. But purloined entertainment is especially coveted by pop-culture-savvy Mexicans, many of whom can't afford to shell out $15 to $20 for a new release -- nearly a week's pay for some in a nation where the minimum wage is less than $4 a day.

Music theft in the United States is largely digital; consumers swap computer files for personal use. In contrast, Mexico's piracy is a gigantic commercial enterprise. It involves everyone from importers of blank discs and plastic jewel cases to hold them to workers in clandestine factories and an army of street vendors. This assembly line last year delivered more than 85 million illegal CDs to eager buyers, according to Amprofon.

The cost of entry is low, just a few hundred dollars for a CD burner and blanks. And profit margins are fat. Bootleg discs are so cheap to produce that CDs selling on the street for as little as 6 pesos, or about 50 cents, can fetch a 100 percent markup.

''There is a lot more competition than there used to be," said Jesus Flores Delgado, a Guadalajara music vendor who has peddled a variety of products in his two decades on the streets. ''But it's a lot less work than selling tacos or something like that."

Although gangsters control production and distribution in some places, hawkers like Flores are everywhere. Pirated music and movies are sold openly on street corners and in public markets, often with stereos blasting to attract customers.

Latin artists are the most copied, from romantic crooner Luis Miguel to Long Beach, Calif.'s own Lupillo Rivera, the bad boy of the narco-ballad. Still, Elvis Presley and the Beatles can be found in the humblest of stands. Young fans of alternative sounds flock to Mexico City's Tianguis de Chopo market every Saturday to score the Sex Pistols and Marilyn Manson for a few dollars each.

Many of the finished products look authentic. The capital's rough Tepito neighborhood, a noted center for piracy, boasts an extensive wholesale section where bootleggers can stock up on blank discs, pilfered liner notes, and plundered cover art as easily as if they were shopping at Office Depot.

''The government and the police see it but they don't do anything," said Isaac Massry, founder of the Mexico City-based Discolandia chain, which shuttered about half of its 25 stores in recent years because of sales lost to the black market.

Corruption plays a role. But in a nation where nearly half the work force toils in the underground economy because there aren't enough legitimate jobs, authorities do not have the resources or the incentive to arrest every small-time operator who is just trying to put food on the table.

Mexico has made some efforts to crack down. In addition to the recently toughened piracy penalties, legislators are seeking other legal changes to make it easier for police and prosecutors to shutter stands, levy fines and file criminal charges. The government has boosted vigilance at customs to root out covert shipments of blank discs and other materials.

Law enforcement is seizing record volumes of counterfeit products. From July 2003 through March 2004, authorities made 129 arrests, seized more than 22 million discs, and knocked out equipment capable of producing more than 250 million CDs annually, according to the Association for the Protection of Intellectual Phonographic Rights, an antipiracy group. But such investigations take time and money in a nation where the police are busy with violent crimes.

''It's like trying to block out the sun with your finger," said Roger Hernandez, director general of the association's Mexican office. ''It's not enough."

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