P 180805Z MAR 09
FM AMCONSUL HO CHI MINH CITY
TO SECSTATE WASHDC PRIORITY 5512
INFO AMEMBASSY HANOI PRIORITY 
ASEAN MEMBER COLLECTIVE
AMCONSUL HO CHI MINH CITY PRIORITY

UNCLAS HO CHI MINH CITY 000199 
 
 
STATE FOR EAP/MLS AND EEB/TPP/IPE JURBAN 
STATE FOR EEB/TPP/IPE FOR HALLOCK, WATTS, AND KEAT 
STATE ALSO PASS USTR DBISBEE AND RBAE 
AMEMBASSY BANGKOK FOR USPTO JNESS 
 
E.O. 12958: N/A 
TAGS: ECON KIPR ETRD VM
SUBJECT: LOCAL COPYRIGHT HOLDERS BATTLE PIRATES FOR HCMC MARKET 
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REF: Hanoi 32 
 
¶1. (SBU) Summary.  Local copyright holders are driving the 
expansion of the legitimate music and video sectors in HCMC. 
While CD and DVD piracy remains rampant in family shops and 
street stalls throughout the city, locally produced and licensed 
Vietnamese music CDs dominate the shelves at high end retail 
outlets, which also feature a limited selection of legitimate 
foreign music product.  A small but growing market for licensed 
foreign DVDs has likewise emerged, and the collection of 
royalties for live and recorded music has soared.  End Summary. 
 
Domestic Music Market Holding Own Against Pirates 
--------------------------------------------- ---- 
¶2. (SBU) The piracy rate for Vietnamese music CDs in HCMC is 
only 40 to 50 percent, claimed Mr. Huynh Tiet, director of the 
Ben Thanh recording studio in downtown HCMC.  Speaking over the 
muffled din of a Vietnamese pop tune being recorded next door, 
he attributed the high percentage of legitimate domestic music 
to both better enforcement and a more refined urban listening 
audience.  HCMC's growing middle class is increasingly willing 
to pay more for a higher quality, attractively packaged 
legitimate music product, Tiet said.  EconOff's "piracy" tour of 
music and video retail establishments confirmed that while 
legitimate Vietnamese music CDs priced at 40,000 VND (2.30 
USD)and up dominate the shelves in higher end music and 
department stores in downtown HCMC, street stalls several blocks 
away offered the same music in simple plastic envelopes for 
10,000 VND (0.60 USD). 
 
Foreign CDs - more expensive and more pirated 
--------------------------------------------- 
¶3. (SBU) While some high end outlets likewise featured only 
legitimate foreign product, several others offered three 
categories of foreign music CDs:  1) pirated discs for 16,000 to 
40,000 VND (0.90 to 2.30 USD); 2) legitimately licensed CDs 
produced in Vietnam by known local labels, and 3) a category 
labeled 'imported music' that consisted of product legitimately 
produced overseas (e.g., Canada, U.S., Singapore).  (Note:  We 
assume these are 'grey market' products, not officially 
imported.  End Note.)  The last two categories sold for two 
hundred thousand VND (11.50 USD) and up. 
 
Legitimate DVD Outlets Gearing Up to Battle Pirates 
--------------------------------------------- ------ 
¶4. (SBU) While the legitimate domestic music sector is sizeable, 
the video market remains predominantly pirated with few 
legitimate DVDs available, even in high end outlets.  Ms. Le Thi 
Thuy, CEO of a media company which licenses foreign television 
programming for HCMC television stations, noted that because of 
the high level of DVD piracy, U.S. entertainment companies such 
as Fox and Warner Brothers drew the line at TV rights and would 
not license DVD distribution rights for the same programs. 
Nevertheless, legitimate DVD distribution channels are emerging. 
 Local film distributor Thien Ngan Company told EconOff they 
sold more than 3,000 Sony-licensed DVDs at their Galaxy cinema 
outlets last year.  Ms. Thuy said she plans to sell a similar 
number of DVDs this year of a Hong Kong TV series she has 
recently licensed.  She notes that because the availability of 
legitimate DVDs is still very limited, most consumers do not yet 
have the option of buying legal.  However once several 
legitimate traders have established niche markets she plans to 
establish a media association of foreign and Vietnamese 
representatives of the film and video industry to run IPR public 
awareness campaigns and lobby HCMC authorities for stricter 
enforcement. 
 
Weak Enforcement Pushes Private Sector to Partner with DVD 
Pirates 
--------------------------------------------- ------------------- 
¶5. (SBU) Ms. Thuy is dismissive of HCMC authorities' DVD 
anti-piracy efforts, saying "it takes months for them to take 
action."  Instead, she reaches out to major DVD pirates herself, 
to either threaten legal action or to cut a deal.  She is 
currently negotiating with several 'politically connected' 
individuals operating a large scale, high quality pirate DVD 
production facility.  She aims to persuade them to produce 
legitimate product her firm has licensed, offering to share 
profits, but also to make use of the pirates' extensive 
distribution network ('much larger than ours'). 
 
High licensing fees disadvantage legitimate distributors 
--------------------------------------------- ----------- 
¶6. (SBU) All our interlocutors said high licensing fees for 
foreign media content increased the cost of legitimate physical 
product to such an extent that it was difficult to compete with 
pirated goods.  The lower royalties paid to domestic copyright 
holders (along with higher sound quality and more attractive 
packaging) help keep local music CDs competitive even at prices 
four times those of pirated discs.  The high cost of licensing 
foreign music however, raised the price ratio of legitimate to 
pirated product to 10 or more, discouraging all but the most 
discriminating customers according to Mr. Tiet.  Ms. Thuy said 
that licensing payments alone often amounted to two dollars per 
DVD, equivalent to the entire cost of a low-end pirated DVD. 
She stressed that legal markets can flourish only when 
legitimate product is available at competitive rates.  As an 
example she noted that, unlike CDs and DVDs, TV program 
broadcast rights are priced according to the size of the local 
advertising market.  As a result, a popular South Korean soap 
opera that will cost 100,000 USD per episode to air in Japan is 
made available to Ms. Thuy's HCMC station for 800 USD. 
According to Ms. Thuy and others (for example the Cable and 
Satellite Broadcasting Association of Asia, reftel) television 
piracy is no longer an issue in HCMC, and audiences enjoy a 
large selection of legitimate, foreign programming. 
 
Domestic Royalty Fees Surge 
--------------------------- 
¶7. (SBU) Royalties collected from music users in southern 
Vietnam skyrocketed from some "dozens of millions of VND" (12 
million VND = $750 USD) in 2004 to nine billion VND ($530,000 
USD) last year according to the Director of the southern branch 
of the Vietnam Center for Protection of Music Copyright (VCPMC) 
Mr. Dinh Trung Can.  While the southern branch of the VCPMC 
received some start up support from the GVN in 2004, the 
self-described non-profit "private" organization now subsists 
from fees it collects and funding from international copyright 
protection organizations.  With a staff of only 14, the VCPMC 
has signed collection agreements with TV and radio stations in 
22 southern provinces, quadrupled the royalties collected from 
live performances in 24 southern provinces, collected over one 
billion VND ($57,000 USD) from karaoke software distributors, 
and signed royalty agreements with 85 percent of Saigon 
Tourist-affiliated hotels and restaurants in the area, according 
to Mr. Can.  (Note:  State-owned Saigon Tourist is Vietnam's 
largest tourism company and owns all or equity stakes of many 
mid-range and high-end hotels throughout Vietnam.  End note). 
He credited strong support from provincial Departments of 
Culture, Sports, and Tourism (DoCST), and increasing public 
awareness of IPRs with enabling the large increase in collected 
royalties.  For example, the HCMC DoCST now routinely requires 
that concert promoters have a copyright agreement in place 
before granting a permit for live performances.  VCPMC aims to 
expand their collection activities in central coast provinces in 
¶2009. 
 
Comment: 
------- 
¶8. (SBU) Although it is impossible to accurately gauge the 
proportion of legitimate audio and video product available in 
HCMC, producers and distributors of both foreign and domestic 
licensed product appear to be expanding market share.  Despite 
inadequate anti-piracy enforcement and high licensing fees for 
foreign media content local media entrepreneurs are competing 
head-on with pirate networks.  Ultimately it may be the 
self-interest of the private sector that elicits sufficient 
enforcement resources from the GVN to turn the tide against CD 
and DVD piracy.  End Comment. 
 
¶9. (U) This cable was coordinated with Embassy Hanoi. 
 
 
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