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Mexico's Rampant Music Piracy A Challenge To Apple's iTunes

MEXICO CITY (Dow Jones)--Computer and technology giant Apple Inc. (AAPL) launched its popular iTunes Store in Mexico this week, hoping to grow its presence in a market where trademark products such as the iPod and iPhone are all the rage.

"With most songs priced at 12 pesos ($0.93) and most albums at MXN120, the iTunes Store in Mexico is the best way for Mac and PC users to legally discover, purchase and download music online," Apple said in a press release.

Mexico is the 23rd country worldwide - and the first developing country - in which the iTunes Store is available.

But it's also one of the world's top-10 markets for pirated goods, particularly music and films, Fernando Hernandez, director of the recorded music and video association Amprofon, said in an interview.

Illegal music downloads in Mexico are growing faster than Internet penetration, and 14.1 million people downloaded a total of 4.73 billion songs last year, an 80% increase from 2007, according to a study by Ipsos MediaCT, a research firm.

Meanwhile, in the streets of Mexican cities, vendors sell pirated CDs - some loaded with more than 100 songs in mp3 format - for as little as MXN10.

Juan Carlos Cortes, who sells pirated CDs outside a Mexico City Metro station, said he isn't worried about losing many customers to iTunes.

"For the social level we handle, nobody would buy music on iTunes," he said. "They'd have to lower the price to maybe two pesos per song."

Trip Chowdhry, an analyst for Global Equities Research, said that while iTunes won't be able to combat music piracy, Apple will still make some money from the store in Mexico.

"More of the music, whether pirated or unpirated, is going to drive the sales of iPods," Chowdhry said, noting that iPods generate more revenue for the company than music sales. "The presence of iTunes is going to create demand for Apple products."

Amprofon's Hernandez said the iTunes virtual store, where customers can buy music with credit cards issued in Mexico or with prepaid gift cards sold at local retailers, will probably only be used by middle- or upper-income Mexicans.

But it does give Internet users who want to download music legally a new way to do it. "Now there's a legal supply, so kids who have a concept of legality - unfortunately there aren't many - don't have a pretext to steal music," Hernandez added....

by Paul Kiernan
Source >> (http://online.wsj.com/article/BT-CO-20090807-717818.html)