Microsoft Law Enforcement Event

“sustainable solutions through partnership and innovation”

Len HyndsHead of Anti-Piracy Enforcement

4th. April 2008

Scale and Scope

• International dimension

• Over 1 billion pirate music albums sold worldwide

• Illegal downloads 20:1

• 37% of all CD album sales are pirate product

• Valued at 4.5 billion US dollars

Research data and statistical information

A&R Video

Marketing

Sales Press PromoInternationalMarketing

Production

Physical Digital

Studio

Production House/Video

Director

Watermark CDRs/Share Distribution

Music played publicly

Radio

Commercial Promo Distribution Gigs e.g. bootlegs

Manufacturing Plants/Digital Partners Playbacks

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From A&R to DistributionPromotional Process

Music Piracy on-line

Forums / Blogs

Cyber-lockers Deep linking

Peer 2 Peer

Music sites /Local content

File sharing

Music Piracy on-line

Music sites /Local content

Music Piracy on-line

Forums andBlogs.

Music Piracy on-line

Deep linkingSites

Music Piracy on-line

Cyber-lockers

Maximum Impact – Vision for delivery

Strategicshift

Businessplan

Intelligencereview

Focus

Maximum Impact – Vision for delivery

• Know the competition – it is the key to beating it

• Current configuration generates answers to:

• Who?• What?• Where?

Holistic Intelligence Assessment

• Lasting solutions emerge when you start to think more about:

• How?• Why?

Maximum Impact – Vision for delivery

• Underlying question – “How do pirate entrepreneurs think about ensuring the viability of their business?” Holistic

Intelligence Assessment

• The answer can be modelled looking at four component process loops:

• Demand driven loop• Supply driven loop• Margin driven loop• Trust driven loop

Demand driven loop

Culture

Social acceptabilityReward

Consumption

Availability

Production

Need“lock-in”

Supply driven loop

Opportunity

Materialavailability

RiskVersusReward

Trust inBusinessRelations

Networkinfrastructure

Productionmethodology

Outletavailability

Margin driven loop

Marketprice

Sourcingcosts

RiskManagement

costs

Level ofcompetition

Distribution &

Transactioncosts

Productioncosts

AlternativeMarketlevels

Politics

Enforcementevasion

Community

laundering

Risk factors

Trust driven loop

Climateof

acceptability

Level ofanonymity

CreditAvailability

And risk

Corruptibility

Availabilityof low

Governancejurisdictions

Size ofTrusted pool

Coststructure

Maximum Impact – Vision for delivery• Armed with holistic

understanding we can identify and build holistic solutions

• Everything we do must be designed to achieve MAXIMUM IMPACT against one or more of the piracy process loops

• Four Major Programmes to address:

• Demand• Supply• Margin• Trust

Holistic Intelligence AssessmentBespoke Strategy

Maximum Impact – Guiding principles

Acknowledge and work with, not against the complexity

Tackle every facet of the organisedcriminality

Maximum traction through genuine anddivers partnerships

Tackle enablers and take away motivation

End game to change behaviour of criminalsand their customer base

Maximum Impact – Programmes of Activity

Demand

Trust Supply

Margin

Intel.Focus

•Multi-faceted targeting of most damaging pirate producers•Lifetime attention for prolific pirate organisations•Bulk data sharing to prevent & deter supply – introduce suspicious trans. project

•Information operations to reduce trust levels for pirate producers•Support and develop members counter-corruption initiatives•Maximise marketing benefit of every enforcement success

•Coordinated asset recovery programme•Revenue generation initiatives•Production/Distribution cost focused projects

•Contextualise the communication strategy•Engineer worldwide days of action•Reverse the Risk-Reward equation

Maximum Impact – Vision for delivery• Breathing innovation into the

enforcement effort• Build culture for creativity,

where innovation is valued as a business benefit

• Factor innovation days into the teams diary – no-one has the monopoly on good ideas

• Structure “think tank” approach sourcing alternative views from different disciplines

• Nurture mindset and develop systems to address piracy “enablers” as well as the pirates

• Take away the motivation for the pirates

Holistic Intelligence AssessmentBespoke StrategyBusiness plan for a new era

Maximum Impact – Vision for delivery• Relationships are pivotal to

ultimate success– IFPI with RIAA and NG’s– IFPI with MPA and other

industry bodies– IFPI with complimentary

industries (e.g.: technology)– IFPI with

International/National Law Enforcement

– IFPI with wider public sector (data sharing and agenda setting)

– IFPI with Governments– IFPI with academia

• Provide leadership in partnerships identifying maximum synergy

Holistic Intelligence AssessmentBespoke StrategyBusiness plan for a new era

Setting the Enforcement Priorities

Threat

Market

Business Model

Product

Maximum Impact – In conclusion

• A measured response in tune with the problems of today – and tomorrow

• It must deliver sustainable success through innovation

• Not just an enforcement strategy – it’s a hostile take over of music pirates

Thank youAny Questions ?

Len HyndsHead of Anti-Piracy Enforcement

4th. April 2008