MEXICO CITY – On Genova Street in downtown Mexico City, illegally copied CDs of music by top U.S. artists sell for 20 pesos, just under $2 a piece, in tiny booths between tables overflowing with batteries, stuffed animals and cheap knockoff sunglasses. That's about one-tenth the price in nearby stores.
Music is even cheaper a few hundred yards away, inside the Internet cafes surrounding the pedestrian plaza of the Glorieta Insurgentes.
At eMilios, about 20 customers a day fill virgin discs with illegally downloaded songs for about $1.60, according to the clerk, Luis Arturo Guerrero, and whether or not they pay legitimate Internet sites for the tunes is not his concern.
"We can't really be responsible for what people see or download," says Guerrero, who sells blank CD-Rs for 8 pesos, or about 70 cents, and charges 9 pesos, about 80 cents, for an hour of computer time. Most use the free file-sharing programs Limewire or Morpheus, he said.
Unauthorized downloads are a global challenge for the music industry, but the problem is becoming particularly serious in Mexico, where intellectual property laws don't punish file-sharing and an increasing number of people are getting the broadband Internet connections that make it easier to download content at high speeds.
Mexico today is a pirate's haven: In a nation where the government has made opening legitimate businesses bureaucratic and costly, consumers have learned to count on "ambulantes," street vendors like the crowd on Genova Street, for everything from contraband cigarettes to DVDs of just-released Hollywood movies to high-end electronics.
Illegal sales already account for 65 percent of CD sales in Mexico, and the entertainment industry is bracing for things to get much worse now that fast broadband connections have become more common, doubling to 61 percent of Web-enabled Mexicans in the last two years.
"Broadband makes it easier for people to trade musical files and to download recorded music, both legally and illegally," said Arturo Diaz, legal director of the Mexican Association of Music and Video Producers, which represents major labels like EMI and Universal Music in Mexico. "We're keeping track of it in order to define our strategies."
Mexico's intellectual property laws already provide for up to 10-year prison terms for people caught selling pirated music in the street, but they are only occasionally enforced, and the penal code does not address file-sharing because no money is exchanged, Diaz said.
"It's a problem with the law that we are already working to solve," he said.
When the next congressional term begins in September, Mexican legislators will consider his group's proposal to punish unauthorized file-sharers with fines of up to $20,000 and 10 years in jail.
Internet use in Mexico increased about 20 percent per year from 2001 to 2006, and nearly one-fifth of the population of 107 million will have Web access by year's end, according to the Mexican Internet Association, which represents Web-related businesses.
"People want faster connections to download music, videos and software," said the group's subdirector, Ernesto Valdez.
The global music industry has had some success in fighting illegal file-sharing on sites like Kazaa and Grokster. The global rate of Internet piracy has tapered off as people react to high-profile lawsuits and the risk of getting viruses from exposing their hard drives to peer-to-peer networks, according to the International Federation of the Phonographic Industry, which represents the recording industry against piracy worldwide.
Countries like Mexico, where broadband is just taking hold and consumers are accustomed to buying contraband CDs, are a particular challenge.
According to the IFPI, with a pirate market valued at $111 million in 2004, Mexico is now within the top 10 countries for music piracy. The major labels say Mexican computer users download about 568 million songs per year.
The movie industry already lost about $483 million to counterfeit sales in Mexico in 2005, according to the Motion Picture Association of America, and while film downloads remain frustratingly slow at broadband speeds, all it takes is one very fast Internet connection and a rack of DVD burners for a pirate to make many contraband copies of the latest blockbuster.
These losses have a multi-faceted impact on Mexico's artists as well, according to Raul Vazquez, IFPI's Latin America director: Local music industry jobs disappear, tax revenues don't arrive, and legitimate Mexican music sites like Beon and Tarabu have little chance to develop in competition with free illegal downloads.
Musicians with record deals lose money on sales, and emerging local musicians miss out because record companies can't afford to develop and market them, opting instead to sell big international names.
"The market keeps shrinking," he said. "The local musical culture disappears because you're not recording local artists."
Recording companies pursued 20,000 lawsuits in 17 countries last year against illegal fire-sharing, but not a single one was filed in Mexico.
"The laws in Mexico are weak and they haven't been updated to take into account online trade," Vazquez said.
Even if the laws do change, finding offenders won't be easy. At Internet cafes, where one-third of Mexico's Internet users go online, several people may use the same computer every hour.
Valdez thinks education is the answer, teaching Mexicans see piracy as a crime. It's a message driven home in Mexican-oriented public service announcements that seemingly precede every rental movie.
But changing the culture of piracy will take time. At the Centro de Communicaciones, which offers rows of Web-enabled computers just a few storefronts away from eMilios, clerk Alan Sanchez Navarro said the many customers downloading free music weren't putting the store at risk, or even doing anything wrong.
"It's legal for you to download music," he said. "It doesn't affect us."