Russia's illicit industry booming

PART 2 OF 5 IN A SERIES

updated 3:13 p.m. ET July 7, 2006

MOSCOW - When “The Da Vinci Code” premiered in Moscow, Konstantin Zemchenko started his count.

As the Motion Picture Association of America's top pirate-fighter in Russia, Zemchenko's operatives were monitoring the capital's markets and street stalls for when the first bootleg copies would appear.

His goal? A modest 10 day-delay. In the worst pirate market in the world after China, that translates into a home run for Hollywood, which says it loses well over $300 million a year in Russia.

On this occasion, the pirates won. Three days after the premiere, a grainy, camcorder copy of the $100 million-plus budget movie was available on DVD for under $6. Two days later a pristine version with interactive menu was on sale for the same price.

The ease with which pirate films, music and software enter the Russian marketplace and the increasingly ingenious means counterfeiters use to get them there are cited by United States Commerce Department officials as a $1.8 billion per year barrier to Russia's entry to the World Trade Organization.

Like running to stand still
It sometimes feels like running to stand still for Zemchenko, whose Russian Anti-Piracy Organization, or RAPO, sifts through the millions of discs that police confiscate.

“We're choking on the volume,” he said in a recent interview in RAPO's headquarters, located in a converted kindergarten on a leafy lane in northern Moscow. Stacks of boxes overflowing with confiscated DVD's clutter its narrow corridors.

In quieter times, Zemchenko organized film festivals abroad as foreign relations director of the USSR's Union of Cinematographers.

Now his job involves more than just long hours in the office.

The High Cost of Piracy Part 1: U.S. firms fight the flood of fakes Part 2: Russia's illicit industry booming Part 3: Mexico's piracy rises with broadband Part 4: China's piracy hurts its own industries Part 5: China companies begin to fight back

“There are threats — all sorts of things. You get complicated moments, you get phone calls,” he said, reluctant to discuss an uncomfortable topic. Anti-piracy organizations have repeatedly stressed the link between organized crime and counterfeiting.

RAPO's warehouse currently holds about $7 million worth of pirated DVD's — enough to make him very unpopular indeed with the people who had hoped to profit from their sale.

While the pressure from Washington has been reflected in a sharp rise in police raids over the past year on optical disc plants and warehouses — the backbone of the counterfeiting industry — the number of pirate optical disc lines in Russia has doubled over the past two years. In Russia there are 50 licensed factories housing a total of 60 DVD and 68 CD production lines, with a maximum capacity of 800 million discs per year. Zemchenko estimates 90 percent produce both licensed and pirate discs loaded with music, films and software.

Corruptoin among beat cops
This bottomless capacity, combined with gaps in Russia's copyright law and corruption among beat cops and movie hall staff alike, make Zemchenko's 10-day limit a tough challenge.

In the case of “The Da Vinci Code,” the first version to appear was a “tryapka” or “rag” — Russian slang for the low-fi copies shot on camcorder directly in the cinema. Despite warnings shown before screenings, Russia's copyright law doesn't bar the practice: if a pirate is kicked out of the movie hall for filming, he can claim the copy was for personal use and successfully sue for the cost of his ticket.

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