The RIAA's annual Commercial Piracy Report has turned up some troubling statistics, as the new data shows that pirated CD distributors are increasingly manufacturing and selling higher-quality product that closely resembles legitimate CDs. Also, large organized crime enterprises are becoming increasingly involved in piracy, illegally burning massive numbers of CDs. The report says that CD-R reproduction in the eastern half of the United States is now dominated by crime syndicates that are intent on monopolizing the illicit market by operating on high volume and low profit margins. As a result, the price of pirated CD-Rs on both the wholesale and retail level has largely declined.

“The practice and trade of music piracy have become more sophisticated, cunning and connected to organized crime,” said EVP of Anti-Piracy Brad Buckles. “Working with law enforcement officials across the country, we continue to develop and implement multifaceted strategies to respond to these emerging threats to artists, songwriters, record labels and others in the music community.”

The RIAA's numbers show a 58 percent increase in seizures of counterfeit CDs, as local law enforcement agencies and RIAA investigators seized 1.2 million counterfeit discs in 2004. But while high volume is required to generate profit in the counterfeit CD business, sustained enforcement and prosecution by police has forced illegal music sellers to keep less product on hand. For this reason, investigators are now more likely to seize raw materials than finished music product. The RIAA's report also says that in 2004, the number of counterfeit CDs that were seized actually declined 27 percent, while the seizure of counterfeit labels rose 372 percent and seizures of CD-R burner equipment nearly doubled compared to 2003.

“Prosecutors and policymakers at all levels of government increasingly recognize that piracy operations not only undermine the continued investment in new music but affect the quality of life of communities and deprive state and local governments of tax revenues,” Buckles added.

The study also notes that the sale of pirated CDs has largely moved from street vendors to indoor retail locations such as convenience stores and corner markets. As a result, the RIAA reported a 21 percent decrease in the plain-view seizures that are typical of street-vendor busts, while the number of search warrants and consent searches rose. Street vendor arrests have declined as well, as police are making more targeted arrests at the distributor and manufacturer level.