Pirated product accounted for an estimated $4.5 billion in worldwide music sales in 2003, according to figures unveiled today (July 22) by the IFPI.

Pirated product accounted for an estimated $4.5 billion in worldwide music sales in 2003, according to figures unveiled today (July 22) by the IFPI.

Total legitimate world sales for the year fell 7.6% from 2002 to $32 billion, according to the IFPI.

The trade group valued pirate sales in 2002 at $4.6 billion.

"This illegal music trade is feeding the profits of international organized-crime syndicates who are involved in drugs, money-laundering and other criminal activities," IFPI chairman/CEO Jay Berman said today in London during the presentation of the trade body's 2004 Commercial Piracy Report.

He added that music piracy "is costing governments hundreds of millions of dollars in tax revenues. It is deterring companies in intellectual-property-related businesses from investing in countries they fear are not adequately protecting their intellectual property rights."

Berman said piracy is having a devastating impact on local music cultures, record companies and musicians, especially in the developing world. Although most of the recent headlines have concentrated on online piracy, Berman warned that "commercial piracy, contrary to what commentators mistakenly think, is just as important a problem for the music industry today as Internet piracy."

In the report, the IFPI highlights 10 priority countries, as it did last year. The main piracy offenders are listed as Russia, Spain, Taiwan, Thailand, Ukraine, Brazil, China, Mexico, Paraguay and Pakistan. Berman called upon the governments of these countries "to take firm action against commercial music piracy."

Poland, which was on last year's priority list, has been removed and replaced by Pakistan. Poland's status was changed due to what Berman described as the implementation of an effective law regulating CD plants. Meanwhile, Pakistan has become "a new piracy hotspot as a result of massive exports of unauthorized optical discs."

On a positive note, Berman said a congressional commission in Brazil has produced "a damning assessment of piracy" in the country, which now needs "a decisive government response."

In Spain, labeled "Europe's fastest-growing piracy problem country in recent years," progress has been made on the legislative side, he added.

Berman concluded: "It is critical that the international community step up pressure on those countries which are failing to meet international standards of intellectual property protection and enforcement. Piracy is emphatically a cross-border problem that requires cross-border, inter-governmental solutions."