Piracy, Internet Music Hits Panama Sales

Sales of recorded music in Panama have declined 30%-50% during the first months of the year, according to the record labels that operate in the country, including Sony Music, Universal, G-Producciones, and BMG. The decline has been linked to the downloading of music via the Internet and to the proliferation of pirated CDs—which sell for as little as $5, compared with $10-$15 for a legitimate CD.

"Piracy in Panama is killing the music industry," says María Sofía de Carranza, owner of record store Discotecas Shophy.

Carranza, whose store is one of the oldest in the country, says she has heard reports of CDs selling for as little as $3. "But the labels have to pay royalties, production, art, taxes, and a whole series of things that make [it] impossible to sell for $5. We can't compete."

It is common to see stands along Panama City's main roads selling counterfeit copies of the latest local and international releases in full view of local authorities. The most pirated acts are reported to be Sammy y Sandra Sandoval, Los Rabanes, Shakira, and such local reggae acts as El Rockie.

Panama does have an anti-piracy law that went into effect in January 1995, which punishes acts of piracy with fines of up to $20,000 or four years in jail. But many contend that the law only applies to big operations.

Dumas Torrijos, owner of G-Producciones—which distributes the product of many labels—says that sales have dropped by as much as 50%, with local artists like Sammy y Sandra Sandoval and Ulpiano Vergara particularly affected: "Authorities have executed searches, but controlling this is difficult, and pirate retailers crop up like wildflowers."

But the problem in Panama is not limited to the small vendors but extends to larger, industrial operations. Labels like Sony Music Panama, which is very active on the anti-piracy front, respond by constantly patrolling the streets for counterfeit copies of their releases.

According to Sony Music Panama GM Manuel González, a series of activities is planned for August to raise consumers' awareness of piracy's impact. There will be TV campaigns featuring local artists, a possible "hour without music" coordinated with radio networks, and a publicity stunt whereby stores will be shrouded with black veils and albums will not be sold for a day.

"We want people to be conscious of the problem," González says. He adds that Sony is also planning to release cheaper compilation CDs to entice buyers to buy legitimate product.

"What's most heavily pirated is reggae, typical music, local acts," González says. "So we're trying to give buyers a cheaper alternative."

Labels are also beginning to offer incentives for purchasing legitimate albums. Rock band Son Miserables, for example, included an interactive menu with videos, photos, and other features as part of its second CD.