He was also "involved" with a company named Red Line and an actual part-owner of KTS, both of which were notoriously prolific and blanketed Europe with shoddy CDs, with good source sound ("archiving" many San Diego shows) but packaged generically and often pressed on defective discs. "They were trying to cut costs to have the cheapest retail price in the market, but that was kind of a failed experiment. Those labels were based in San Marino, a sovereign country inside the borders of Italy, to get around some of the OSA fee requirements [the equivalent of BMI or ASCAP], even though the CDs themselves were being pressed in Prague [Czech Republic]."
He pauses. "Not that there was anything criminal going on." He's correct; by exploiting a loophole in the Rome Convention, it was technically legal, in countries that had signed the Rome Convention, to issue concerts recorded in countries that hadn't signed. Such as the USA. "In Italy, we went through the Italian Authors' Society. They charged us a registration fee, and the government issued an approval stamp that went onto each CD...that made us immune from prosecution in Italy for bootlegging."
But if they were releasing concerts without performers' permission, weren't the CDs still bootlegs? "No," he explains, "to get the stamp, we had to promise to pay royalties to the original artists. Rinaldo Tagliabue at Great Dane [Records] was the first guy to realize you didn't need permission, you only had to offer the performer 'fair compensation.' We just had to make this nominal deposit in an Italian bank, and there'd be this little line of type on the back of the CD that says, 'Hey, if you're one of the guys on this CD, well, guess what, you have some money waiting for you in an Italian bank account.' "
Did any performers ever withdraw their token royalties?
Tracey laughs. "Almost never. Actually, I think a couple of British guys requested the [bank] routing number."
He waxed on about "the good old days. In Australia, bootleg CDs with American concerts were legal as long as the word 'unauthorized' appeared on the cover. Every newsstand and grocery store in the country was selling my stuff! They were coming in [to the U.S.] by the boatload, all cleared by customs. Even the major distributors were picking them up. BMG would carry Comet Records and Planet Song titles, and they'd turn up at Tower and Strawberrys, all racked the same as regular releases. Everybody knew about the copyright loopholes...there were stores like Second Coming and Revolver in Greenwich Village where more than half their stock was 'live import' CDs!"
Being a well-paid supplier instead of a label owner turned out to be a good plan when retail prices for import concert CDs plummeted in late 1994. "This guy in Bavaria, Wolfgang, had a label called Live & Alive...he flooded all the supermarkets in Europe and Australia with live CDs that he sold at half price. The market fell apart when people realized that bootlegs don't have to cost more than a regular CD; they can even be cheaper."
He was also rethinking his financial stake in the Italian labels, after being visited in his San Diego home by two darkly dressed men who "suggested" that he consider selling his entire masters collection to Teddy Bear Records, a rival of his own business associates with reported ties to the Italian Mafia. He declines to go into further detail.
The protection gap era ended December 8, 1994, when President Clinton signed the Uruguay Round Agreements Act (URAA), implementing the General Agreement on Tariffs and Trade (GATT), including trade-related aspects of intellectual property. Provisions in the URAA amended U.S. copyright law, creating a new federal "Anti-Bootleg Statute," which criminalized "unauthorized manufacture, distribution, or trafficking in sound recordings of live musical performances." Convicted bootleggers were subject to up to five years in prison and a $250,000 fine.
The GATT was signed by the United States and 119 other countries. Shortly after its enactment, the RIAA utilized the FBI and U.S. Customs to shut down overseas importers, seizing incoming shipments and raiding stores that carried the now-illegal bootleg CDs. The U.S. government threatened China with trade restrictions over its failure to honor international creative copyrights. A sort of global copyright system was set up, enforced by a brand-new international antipiracy team called the IFPI (International Federation of the Phonographic Industry). Police forces throughout the world agreed to assist the IFPI, especially among members of the new European Union (E.U.), who were offered import tax benefits if they agreed to enforce E.U. directives explicitly granting performers the right to "authorize or prohibit the fixation of performances."
In 1995, the IFPI issued a report that estimated 32 percent of Italy's domestic music sales the previous year -- about $145 million U.S. -- involved pirated or bootlegged recordings, and this accounted for about half of all pirate music revenues in Europe. "Word got around that the Italian government wanted to put on a show for the U.S. by raiding all the concert labels to confiscate equipment and destroy stock...people were leaving the country under cover of darkness, with DAT decks under their arms and tape boxes busting out of their luggage. I lost all the money I invested as part owner of the labels I was involved with...a few [record companies] paid me off in free CDs that they got American distributors to dump on me by the boxful. The CDs were already in the country, but [distributors] were afraid of getting busted by feds, so they were happy to get rid of all their concert imports." Not all the Italian labels went under overnight. "Kiss the Stone packed up and moved to Singapore, and they kept buying my stuff for a while. They couldn't get anything into the States, though...at that point, Customs was even opening up single-CD packages."
Tracey says demand for his concert masters dropped to almost nothing after July 1997, when a meeting between 11 European and American bootleg distributors ended with their arrest in a complex U.S. Customs sting operation (at Disney World!). The distributors were charged with a total of 40 counts involving conspiracy to make and sell bootlegs. "That killed 90 percent of what was left of the wholesale network, so I pretty much stopped circulating my concert master catalog. I still recorded shows for myself, and sometimes I swap with other tapers, but I think the last company to buy a concert from me was [Spain's] MC Records, around '99."