The home entertainment business – DVD, VCD and audio CD – is flourishing in Morocco, but a complete lack of any legitimate product means the market is served totally by the informal sector. ANTHONY I P OWEN, who has managed DVD studios for both Angel Films (Denmark) and the Metropolis Group (London), and has now set up a DVD studio in Casablanca for Sigma Technologies, describes the situation and what can be done to bring the market up to international standards.

'Jakob' is well known in the neighbourhood. One of the estimated 100 000 people who make their living in the pirate DVD industry in Morocco he is also one of the new breed of independent operators taking over the market from the large wholesalers who dominated it in the past. 'Jakob has a pitch outside the hammum – the steam baths – and sells DVDs to the inhabitants of the big public housing complex opposite, to those who frequent the café next to the baths and to passing trade among those who are strolling in the sun in this area of Casablanca, a couple of kilometres from the centre of town.

His stall does a modest business selling on average about 20 discs a day from a selection of about 200 titles at €1 though he will 'part exchange' half of them within a day or two for €0.50, a form of 'rental' business.

But even with this level of turnover he can expect to earn more than the wage of €7 per day he could have made if he had been able to find work as a hairdresser – his chosen profession – and, together with a brother who also sells pirate DVDs, their income is just enough to support his parents and four younger brothers.

Jakob started by buying his stock from one of the major wholesalers based in Derb Ghallef – a four block area of informal stalls and shops selling everything from designer-brand clothes directly from local workshops to imported Italian furniture, along with electrical goods of all types, chipped digital satellite receivers and a huge selection of films, music, console games and computer software on disc.

Despite the rundown look of the stalls they are some of the most expensive real estate in the city, supplying the vast majority of smuggled and pirated goods, including DVDs, VCDs and audio CDs, to Casablanca and across the rest of the country.

There is no history of factory-made counterfeits in the region, all are duplicates manually burnt on home computers equipped with consumer burners. Due to the risk of police raids duplication is carried out in villas and workshops around the city where banks of PCs burn discs on a nearly-industrial scale.

Source material is either ripped directly from legitimate European DVD product – generally from Spain, France and the Netherlands, the main areas of the Moroccan Diaspora – or downloaded using bit torrent or similar internet sources.

Initially, the entire market was supplied and controlled by the wholesalers operating in Derb Gallef and similar areas in a couple of other major cities.

However, the increasing availability and ever reducing cost of DVD burners and the Internet (reliable and unlimited ADSL at speeds of up to 20Mbit is available countrywide at similar to European prices) along with ever easier-to-use DVD ripping and copying programmes has given people like Jakob a chance to branch out on their own.

Jakob started with nothing except a love of films and computers. His wholesaler let him have his initial stock on credit and he used a cardboard box as a display case until he had earned enough to buy a small transportable display rack. He managed to put aside some of his profits for investment and about four years ago he bought his first computer with a DVD burner and a thousand blank DVDs.

A friend went into business with him and bought a colour laser printer for printing covers and they were rolling. Since then he has bought another five PCs for duplicating and the business has expanded; he now supplies several other street sellers, each of whom needed a start-up capital of about €100 for a display case and their initial stock. Jacob cannot afford to give credit to his agents yet.

Even though his sales are brisk, margins are low. Jacob, like the other small operators, pays €0.25 for blank discs (usually European sourced, though more and more coming directly from the Far East) and €0.20 for packaging. This is usually a standard black DVD hard plastic case with a colour laser printed cover, but when there are interruptions of supply or the price of blank discs rises and margins shrink his customers accept discs in thin cellophane pouches with a cover slip. But Jakob can count on roughly doubling his money on every disc sold.

As with distribution the world over, stock selection and levels are all important. There are three other street sellers within a few hundred metres of his pitch and if he does not have what his customers want he risks loosing a sale. His strongest sellers are the season's big American blockbusters. His customers have seen the publicity on American TV channels re-transmitted from the Gulf states via satellite and know the release dates.

Taken from consumer video camera recordings downloaded from the Internet within hours of a film's first cinema showing and authored with consumer tools the discs contain nothing more than the film and its soundtrack, and despite their abysmal quality, they sell as fast as Jakob and his collaborators can duplicate them.

Language is a limitation. The first versions are invariably in English, and it is usually a month or so before films are released in Canada or France and a French dubbed or subtitled version becomes available. It is not uncommon for customers to buy a copy of the first version to assess the film and then buy a copy in French when it becomes available.

For those with the patience to wait for the official release window to pass, a 'real' DVD version arrives within days of the legitimate release on disc of a version localised with French dubbing or subtitling.

Quality is still likely to be compromised however, as – though dual-layer burners have been obtainable in the country for some time – dual-layer discs are nearly impossible to find and are currently too expensive to make their use economic.

Extra features are dropped, additional soundtracks stripped away to leave French and, sometimes, the original language and the film recompressed, if necessary, to fit on a 4.7Gb disc.

After the season's high profile international releases, the majority of titles sold – 50% to 60% – are American films and TV programmes from the last three to five years, including a surprisingly high number of deep back catalogue and 'direct to DVD' titles. Romance, comedy and action/horror are the most popular genres along with children's cartoons.

A further 30% are Egyptian titles (Egypt being the centre of the Arabic-speaking entertainment industry), with the last 10%-20% being Kung Fu and South Asian films, international classics, especially westerns, and international and Middle Eastern music videos.

The Law

Morocco does not suffer from a lack of legislation to use against DVD piracy. Internationally, the country is a member of the World Intellectual Property Organization (WIPO) and has signed the Bern and Universal Copyright conventions.

There are two domestic laws which directly criminalize DVD film piracy (defined as dealing commercially with video material without having acquired the rights from the copyright holder) with fines ranging from €600 to €3,000, doubling on any subsequent offence. In addition, there is a requirement for distributors to be registered and all releases licensed by the Moroccan film institute (Centre Cinématographique Marocain - CCM) with penalties of up to €10,000 for each and any unlicensed title on sale.

Civil action for damages where copyright has been infringed may be taken against pirates at any level by the government body charged with collecting royalties (Le Bureau Marocain du Droit d'Auteur – BMDA) who acts on behalf of international and domestic rights holders.

As well as the existing legal framework and treaty obligations, a new, very wide-ranging and economically important trade liberalisation treaty has been signed between Morocco and the United States. This comes into full force in 2010 and includes intellectual property provisions even more stringent than those in operation today.

In the opinion of the Industry Advisory Committee on Intellectual Property Rights, the Morocco Free Trade Agreement contains "...the most advanced IP chapter of any FTA negotiated so far", though recognises that "Morocco, like all developing nations, suffers from a lack of effective enforcement of both domestic and international laws".

Interestingly, though the law is the same for both domestic and international productions, and local films are very popular at the box office at the few remaining cinemas in the country (all but a dozen or so have closed their doors, victims of the pirates, though there are a couple of multiplexes just holding their own) there operates what can only be described as a 'gentleman's agreement' that Moroccan films are rarely pirated.

Apparently copies of some few domestic films can be found on VCD if one searches hard enough but they are uncommon and not carried by street traders – though an exception was the most successful (and controversial) Moroccan film of 2006, Marock, which was on sale briefly no more than a month after its cinema premiere in a pirated version of what appeared to be an as yet unreleased legitimate disc.

"The pirates understand that they are hurting the industry and so are not so willing to copy Moroccan films," said a spokesman for the CCM, "and there is a widespread view that Moroccan films are protected while foreign films are not."

That the law can be remarkably effective when applied, and it is being applied more and more frequently, has been shown with recent clampdowns. The most spectacular raid seized nearly half a million pirate CDs and DVDs and cleared the streets of product in Rabat and Casablanca – the main, and richest, urban centres – for nearly a month afterwards.

One of the kingpins of the large wholesale pirate operations, Mr. 'Tbib' (Le Docteur), a near-legend who has been operating since the days of pirate VCDs, was apprehended and sentenced to 10 months in prison and fined over €2,000, as well as having his stock and equipment confiscated.

Unfortunately, the main wholesalers' diminishing market share makes control and enforcement even more problematic. Police resources are stretched thinly and the logistics of mounting an effective operation are difficult.

Whilst the big wholesalers are few in number and could eventually be rounded up, there are always others looking to fill the gap and the new challenge is to try and control the thousands of groups and individuals acting independently.

On each occasion the law is enforced against major figures the new entrepreneurs simply leave the streets and switch to home deliveries, taking orders by phone or by setting up unofficial 'points of sale' in local cafés. With other, and more pressing priorities, the authorities do not have the resources available to clamp down for any length of time, and within a weeks the street sellers are back in place.

Towards a legitimate market?

Along with an increasing use of legislation, the general rapid economic and social development of the country is increasing the pressure to bring the entire home entertainment industry into the formal sector. Most importantly, the pirates themselves are realising the potential of the legitimate market and looking at their business models.

Seizures of product and equipment are increasing along with fines and prison sentences and enforcement is becoming more consistent, all of which is hitting where it hurts: profits! Wholesalers have a well developed, vertically integrated distribution chain, now threatened by the independents, and they know their market from long experience.

Competition for the home viewer is limited with only two domestic TV channels and the new, seemingly 'uncrackable', satellite encryption systems reducing the numbers able to view films from channels broadcasting from the Gulf states. So, if the wholesalers could work within the law they could formalise, expand and consolidate their existing businesses. They have the knowledge of the market and the distribution network. All that is needed is legitimate product.

There is NO legal DVD product available in Morocco. None. Those who do not buy from the pirates cannot buy films. Musically, the domestic scene is thriving with a number of small studios and associated labels releasing some legitimate Audio CDs onto the market at the same price (€1) as pirated material and sold through the same supply chain.

Attempts have been made to import international music CDs with limited success, and Virgin Megastores have announced the opening of a small store in Rabat in 2008. However, prices pitched at European level have always proved too high for the Moroccan consumer, and limited attempts to market imported DVDs have not survived long, even the cheapest disc costing several days wages by average Moroccan standards.

Opinions differ on a maximum consumer acceptable retail price. Last year, the CCM released some VCDs in the Berber language at a retail price of €2.50 against pirate VCDs at €0.60. These sold reasonably well and local observers feel that a price of €3.50 for legitimate DVDs may be just acceptable.

This being an absolute maximum price for introducing legitimate product into a market served so well by piracy. Higher prices could lead to a wave of 'secondary piracy' where legitimate copies are duplicated for friends and family. For €3.50 the consumer would expect discs conforming to international quality standards, localised into French or even Arabic, with the usual 'extras', with as wide a range of titles available, and as conveniently accessible as is offered by the pirates. Packaging in Arabic would both make titles more consumer-friendly and minimise 'leakage' north to Europe.

This pricing ought to be possible with the imaginative involvement of the major international rights holders and their willingness to invest in the creation and growth of a legitimate market. A large number of titles on the local market, at present earning nothing for their owners, have already fulfilled their economic potential in the developed markets. A system of licensing granted on a replication-run by replication-run per release in a single territory, credibly audited, with titles authored locally, would allow the existing players, and newcomers, to begin to move into the formal – legal – sector.


MOROCCO KEY FACTS
- Population: 33 million (median age 24 years, growth rate 1.5% per annum)
- Unemployment: Officially 17%. (some NGO's believe the real unemployment rate may be double this in urban areas).
- Minimum wage (net): Euro 7 per day
- Languages: (Spoken only) Dialectical Arabic, Berber, (Written/spoken) Standard Arabic, French, some Spanish.
- Literacy: 52%
- Economic growth rate: 6.7% (2006 estimate.)
Source: CIA Factbook.

There is a willingness on all sides: the consumers, the authorities and the pirates. A move to make affordable product available would not only create a revenue stream for rights holders which does not exist at present, it would be widely supported.

There is a huge potential for the home entertainment business in Morocco, not only on the distribution side but also in the many allied services that a dynamic industry supports. The question is: Who will be first to put product into the marketplace?


ANTHONY I P OWEN is former Studio Manager at Angel DVD Scandinavia (Copenhagen, Denmark) and Metropolis Group (London, UK). He has now set up a (legitimate!) DVD studio in Casablanca, Morocco, for Sigma Technologies SARL and is developing legitimate DVD distribution channels in the country.

MOROCCO KEY FACTS
- Population: 33 million (median age 24 years, growth rate 1.5% per annum)
- Unemployment: Officially 17%. (some NGO's believe the real unemployment rate may be double this in urban areas).
- Minimum wage (net): Euro 7 per day
- Languages: (Spoken only) Dialectical Arabic, Berber, (Written/spoken) Standard Arabic, French, some Spanish.
- Literacy: 52%
- Economic growth rate: 6.7% (2006 estimate.)
Source: CIA Factbook.

Contact: anthonyo@menara.ma

Story filed 15.04.07