1. Microsoft Law Enforcement Event “sustainable solutions through partnership and innovation” Len Hynds Head of Anti-Piracy Enforcement 4 th. April 2008

3. 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

4. A&RVideo Marketing SalesPressPromo International Marketing Production PhysicalDigital Studio Production House/ Video Director Watermark CDRs/ Share Distribution Music played publicly Radio Commercial Promo DistributionGigs e.g. bootlegs Manufacturing Plants/Digital Partners Playbacks Album/Single RecordedAlbum/Single Release Date Distribution to Retail From A&R to Distribution Promotional Process

5. Music Piracy on-line File sharing Music sites / Local content Peer 2 Peer Deep linking Cyber- lockers Forums / Blogs

6. Music Piracy on-line

7. Forums and Blogs.

8. Music Piracy on-line Deep linking Sites

9. Music Piracy on-line Cyber- lockers

10. Maximum Impact – Vision for delivery Focus Intelligence review Business plan Strategic shift

11. 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?

12. 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

13. Demand driven loop Culture Social acceptability Production Availability Consumption Reward Need “lock-in”

14. Supply driven loop Opportunity Material availability Production methodology Network infrastructure Trust in Business Relations Risk Versus Reward Outlet availability

15. Margin driven loop Market price Sourcing costs Production costs Distribution & Transaction costs Level of competition Risk Management costs Alternative Market levels Risk factors launderingCommunity Enforcement evasion Politics

16. Trust driven loop Climate of acceptability Level of anonymity Size of Trusted pool Availability of low Governance jurisdictions Corruptibility Credit Availability And risk Cost structure

17. 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 Assessment Bespoke Strategy

18. Maximum Impact – Guiding principles End game to change behaviour of criminals and their customer base Tackle enablers and take away motivation Maximum traction through genuine and divers partnerships Tackle every facet of the organised criminality Acknowledge and work with, not against the complexity

19. Maximum Impact – Programmes of Activity Demand TrustSupply 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

20. 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 Assessment Bespoke Strategy Business plan for a new era

21. 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 Assessment Bespoke Strategy Business plan for a new era

22. Setting the Enforcement Priorities Threat Market Business Model Product

23. 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

25. Thank you Any Questions ? Len Hynds Head of Anti-Piracy Enforcement 4 th. April 2008