SOFIA, Bulgaria - It is a sweltering June day in the Bulgarian capital, with the mercury rising to 32° C (90° F).

I'm standing on a bustling dusty street opposite the notorious Slaveikov Square in the city center. Officially, this downtown square, part of the city's shopping district, houses Bulgaria's most popular book market, but the locale has for years been known as a distribution center for pirated goods, mostly music, movies and software. I stroll between the numerous stalls, most of them offering novels, computer training literature, textbooks, manuals and even old books for resale. But at the Slaveikov book market, the stands generating most customer interest ain't selling books at all.

It has grown into a familiar scene. CD covers, hundreds of them, neatly stacked in carefully organized catalogues, lying on a dozen of portable tables, scattered between the booksellers. The procedure is well-known and even better tested. I flip through piles of mostly photocopied disk covers, sorted by type -- music, movies, games, software collections. You can find virtually everything: Microsoft's latest operating system Windows Server 2003, recently released "The Matrix Reloaded" movie, Madonna's newest album "American Life", professional 3D animation software Maya, several versions of the popular computer game "The Sims", even a compilation of episodes of the highly-rated TV show "Friends".

I decide to buy a two-CD pack with this year's Oscar-winning movie "Chicago", a film that is yet to reach Bulgaria's cinemas. The salesman, a guy in his early twenties, makes a call on his cell phone and requests the disks to be delivered.

The piracy giant

The 1989 fall of the Communist regime in Bulgaria brought fundamental change to the Eastern European nation. Alongside the long-suppressed freedom of speech, rediscovered pluralism and private initiative, rampant corruption, inadequate legislation and the urgent need for reforms in all sectors of society were the main factors, marshalling the priorities of law enforcement agencies. And despite some early moves on part of Bulgarian legislators, the issue of copyright and intellectual property protection remained on the backburner.

In the early 1990s, the country became a pivot for pirated audiovisual and software products. According to some studies, at one point, Bulgaria was the second largest exporter of music, movie and software piracy, just after China, a state more than 160 times larger in terms of population.

In 1998, over 90 percent of all musical recordings and business software were illegally used. The situation with entertainment applications -- computer and console games -- was even worse with nearly 100 percent of all usage deemed unlawful, according to data gathered by the Interactive Digital Software Association (IDSA). Bulgaria was a major source of illicitly pressed compact disks, most of which originating from several CD plants in the country. Although the factories' production was widely available on the domestic market, a substantial amount was exported internationally, primarily to Russia and Ukraine, but also to a number of Central and Western European countries, including Belgium, Germany and the United Kingdom.

Yet the period from 1995 to 1998 marked the first major crackdowns on the piracy market. Under the gathering threat of limited economic sanctions by the United States and after several listings on the U.S. Special 301 Priority Foreign Country Watch List, the Bulgarian government launched long-awaited measures to crush copyright crime. All CD manufacturing facilities were shut down and required to obtain proper licenses and verifications before reopening. Numerous raids were conducted at known trade centers, including the infamous Slaveikov Square. Tens of thousands of pirated CDs were forfeited by the authorities both from the book market and from nearby warehouses, with the noteworthy assistance of piracy-fighting organizations like the Business Software Alliance (BSA), BullACT (Bulgarian Association Against Copyright Theft) and even representatives of individual IT companies such as Microsoft.

Buying -- easy as ever

As I waited under the scorching Sun for my CDs to be delivered, I started thinking whether anything has really changed. In its regular recommendations, the International Intellectual Property Alliance (IIPA) has for years scathed Bulgaria's ineffectual judicial system for not bringing the violators of intellectual property to apposite justice.

"The markets in Bulgaria are still swamped with pirated product and Bulgaria's overall enforcement system continues to be dramatically ineffective," reads the latest IIPA report.

In the past 14 years, a fraction of all investigations resulted in court hearings and convictions. Eventually, almost all sentences represented ludicrously small criminal fines.

I asked the salesman where he got the disks from. My question aroused his attention instantaneously.

Here, it is generally accepted that you do not inquire about the stock's legality or who actually manages the distribution business. A multitude of police raids in the past, started with what seemed to be a normal customer, who later turned out to be an undercover officer, part of a massive anti-piracy operation.

The four or five questions I managed to ask him resulted in a single response.

"I'm just selling here," he said.

I told him I was a journalist, investigating copyright piracy in Bulgaria, but that only seemed to panic him further.

At this point another man approached the stall, carrying in a translucent nylon bag what appeared to be the disks I had ordered. I was about to get the movie "Chicago" for less than $10, but the salesman decided it's safer to drive me away. When the other guy heard of my questioning, he got clearly upset and tucked the nylon bag under the counter.

Experience with law enforcement has taught these people not one or two lessons. The news spread across the square pretty fast and most traders started looking rather alarmed.

Two hours later, I returned to the Slaveikov book market. A group of three Germans and their translator were looking at the famous CD catalogues. The man behind the booth had evidently just managed to sell them a CD with the Adobe Photoshop graphics suite. He was telling them that if they buy three more disks, he'll let them take a fifth for free.

Piracy haven or piracy heaven?

As a phenomenon, music, movie and software piracy has always found breeding ground in countries with three specific characteristics:
weak, insufficient copyright protection laws or slow-moving, overwhelmed judiciary;
growing need for computer and Internet technology;
small purchasing ability of the population.

Bulgaria has them all:
modern, EU-compatible legislation, but corrupt, ineffective and snail-paced judicial system;
computing swiftly pervading homes and businesses;
low income with the average salary under $1,400 per year.

The last 5 years saw piracy substantially decreasing. In the late 1990s, BullACT, the organization fighting for the intellectual property rights of major motion picture studios, enjoyed tremendous success in closing illegal video rental stores and better marketing low-cost video cassettes and DVD disks. Today, 24-hour video renting and a movie ticket can go as low as $1.20. Due to the threat of heavy fines and potential (albeit unlikely) imprisonment, a growing number of businesses are starting to use licensed software.

At private homes, however, the picture remains grave as ever. Pirated disks are relatively cheap since the distributors are unconcerned with whether they contain a dozen songs or software worth thousands of dollars. In Bulgaria, unlike company offices and Internet cafés, home users have never encountered copyright law enforcement, which serves as an incentive to buy in a more appropriate for the economic reality way.

What really shook the piracy market in Bulgaria, however, was neither law enforcement nor the threats of it. The traders on Slaveikov Square are now disturbed by competition -- competition, coming not from other pirates, but from large, prevalent Bulgarian companies. Internet piracy is growing rapidly worldwide. Increasingly effective compression technologies and the penetration of high-speed broadband connections have transformed into the roots of contemporary illegal music, movie and software distribution. For nearly four years now, the concept of peer-to-peer file-swapping has rattled the IT industry, raising fundamental questions on intellectual property protection, unimaginable just half a dozen years ago.

File-sharing networks like Kazaa form multimillion-member communities, exchanging millions of files a day, the vast majority of which indisputably constituting copyright infringement.

In 2001, Napster, the pioneer music-swapping system, was forced to shut down after a U.S. court ordered the removal of all material violating the intellectual property rights of numerous record labels. Due to its centralized structure, Napster had an opportunity to act and, willingly or not, was forced to do so.

"If you need free music, movies, games or PC software, come to Bulgaria," Ivan Tenev, a 21-year-old computer enthusiast from Sofia, told me.

The microcosm of Bulgarian Internet space can offer you unrestricted, cost-free and high-speed access to gargantuan piles of easy-to-find audio, video and software files. A couple of years ago, one of Bulgaria's most prominent Internet Service Providers (ISPs), ProLink (also known as Techno-Link), launched a free web hosting service, offering 1000 megabytes of space for unlimited use. ProLink's sweet offer was accessible from Bulgaria only due to the high costs of international Internet traffic, but its users quickly understood the service's true potential was not in hosting small personal web sites.

Today, Techno-Link's free web hosting servers store hundreds of thousands of music, movie, business and entertainment software files, packed with search engines, alphabetical lists and useful message boards.

"You can find practically everything. And if it's something that's actually not there, you can always request for someone to add it," Mr. Tenev told me.

ProLink has developed a sophisticated file-sharing system, where users can upload large quantities of data in publicly visible directories, so that others can later download it from a central, easily searchable and extremely reliable server.

This type of free file hosting is representing a huge magnet for customers. ProLink's clients have higher-speed, priority access to the system. As part of Bulgaria's largest Internet services company, Spectrum Net, ProLink is an important income channel, seeing constant growth and strong customer satisfaction.

Due to the practical lack of law enforcement and the cost-effective business model, similar services sprang up overnight, loaded with Bulgarian and foreign music, good-quality movies and TV shows, wide-ranging business and entertainment software. In return, the ISPs providing the free web hosting facilities get more clients eager to download.

Officially, these companies maintain a "zero-tolerance policy" against pirated products and claim they remove infringing content upon notification from copyright owners.

Marina Malcheva, administrative director of the Bulgarian Association of the Music Producers (BAMP), told me that the web hosting firms meet requests for removal of limited amounts of content, but are utterly reluctant to delete materials on a large scale, citing technical difficulties and a time-consuming process.

"When we demand the removal of, let's say, 90 percent of the music files [stored on the server], they start dodging us," she said. "They know what they have to do."

Alexander Tuikov, an expert at BullACT (Bulgarian Association Against Copyright Theft), was less harsh, noting that at this point, "the companies are gliding on the edge."

To retain the status quo, the hosting providers resort to obfuscation of ability and responsibility. All services assert their users and their users alone are answerable for the files they store and that the companies do not have the capability to monitor nor the knowledge about the legality of the content stored on their systems.

In reality, this is almost completely false. From a legal standpoint and according to their own terms of service, the Internet Service Providers are required to remove the materials violating Bulgarian laws (including those protecting intellectual property rights), which they have knowledge of. In fact, the structure of their services encourages copyright infringement. At ProLink, for instance, a sophisticated forum system has separate discussions on exchanging or requesting links for movies, music, software and games. Users who reach their limit of 1000 MB can request, and are often granted, additional or even unlimited web space, after a review of their uploads so far. Techno-Link's free web hosting also offers an MP3 catalogue of thousands of audio files located on the server -- nearly the entire collection constitutes clear and indisputable violation of numerous copyrights. On top of that, to limit the duplication of large files, the companies are running specific scanning procedures aimed at removing already uploaded content. Just as easily, detection and deletion of once removed materials can be easily performed, curbing illegally stored music, movies and software.

Two other prominent Internet Service Providers in Bulgaria, BOL.BG and Bulgaria Online, have undertaken even bolder moves. The two companies maintain extensive, publicly available and internally maintained collections of MP3 files. On top of that, BOL.BG, a hugely popular company, hosting the official web site of the Bulgarian President and closely related with the country's branch of Internet Society (ISOC), has established a server available exclusively to its customers, offering access to thousands of songs, movies and even pornography copied from paid adult web sites.

On the other hand, Bulgaria Online's MP3 archive consists of over 106,000 audio files by nearly 2,300 artists. A company statement posted on the web site reads: "The music [...] is intended solely for acquaintance with the work of a specific author. By using the present catalogue you agree to remove the downloaded files within 24 hours..." Marina Malcheva from BAMP called the notification "ridiculous."

"Nowhere in the law it's written you can violate it for 24 hours," she said.

The Bulgarian Association of the Music Producers (BAMP), an industry group, whose members represent all major record labels, including BMG, EMI, Universal Music and Warner Music, has filed a complaint with the National Service for Combating Organized Crime (NSCOC), an agency working under the Bulgarian Ministry of Interior.

"The crimes against intellectual property are out of law enforcement's priorities," Mariana Lazarova, BAMP's Executive Director, noted. "The authorities basically consider the problem a private issue."

Both BAMP and BullACT expressed satisfaction with current legislation in the country, but harshly criticized the apathetic enforcement of the law. On numerous occasions anti-piracy organizations have indicated police raids and customs seizures of pirated products as examples of progress in the right direction. In the meantime, however, the uninterrupted and public availability of illicitly reproduced materials, both on physical disks and on the Internet, testifies to flagrant failures in Bulgaria, a EU membership candidate.

Of the 192 criminal cases commenced last year against violators of intellectual property laws, none resulted in jail time. The majority of the 84 actually convicted were sentenced to pay fines of less than $1,000. The Interactive Digital Software Association (IDSA) reported $21.9 million of losses in Bulgaria only, due to rampant illegal distribution of computer games -- an estimated 91 percent of all entertainment software used in the country .

Stefan Stefanov, 24, works at a Sofia music store, selling (legally) CDs, audio cassettes and musical instruments.

"The music market in Bulgaria is extremely shrunk," he told Svetlozar Online. "This is a factor of critical importance to Bulgarian artists who barely make any money from selling CDs. I'm sure most of them benefit from [free] distribution of their recordings on the Internet, which, in one way or another, gains them popularity among their target audience. Fans are of particular significance for the primary source of their income -- live performances at local clubs, discos and concert appearances."

Still, the improvement of the piracy situation demands deliberate government-supported actions to address the underlying reasons for the tattered economic picture. The level of consumer culture in Bulgaria remains discouragingly low. Marred both by the hard-pressed customer wallet and the, although fading away, legacy of the Bulgarian mentality afflicted by 45 years of totalitarian rule, Bulgarians continue to belittle the financial aspects of copyrighted materials.

Unfortunately, with the exception of 1998, when Bulgaria faced the potential of partial economic sanctions by the U.S. due to unacceptably high piracy rates, the state's focus keeps swaying away from intellectual property protection.

The country not only misses an opportunity to bring fresh, badly needed tax incomes from copyright holders' revenues, but its inert conduct serves as an unfavorable educational model.

In its 11th annual survey, Edward Murphy, the President and CEO of the U.S. National Music Publishers' Association, wrote: "It is no secret that piracy is the greatest specter facing the music industry today."

Even more. Piracy destroys creativity, deprives essential funds required for new talents to emerge and most of all, its significant pervasion bolsters the distorted image of its noncriminal, normal, yet essential existence.

Today, 14 years after the fall of Communism and 4 years before its potential integration into the European Union, Bulgaria is facing a drastic, economically-onerous and intolerable problem, which, to some extent, seems hidden from the public eye. And sooner or later, this vortex of crime, broadening piracy purview, blatant arrogance and negative influence will resurface as a thumb in the eye of this nation, its people and its future.