RECORD LABEL EMI’s Irish division says a near halving of its profits to €1.1 million in its 2011 financial year is mainly due to piracy.

The Government recently told EMI Records Ireland it intends to plug a gap in the law that effectively allows free downloading of pirated music, films and games.

The company had threatened to take legal action against the State if the Government continued to put off dealing with the issue, which EMI and a number of its peers raised in the High Court in October 2010.

EMI Records Ireland’s figures for the 12 months ended March 31st last show pretax profits at the company, which sells CDs and digital music, had fallen to €1.1 million from €2 million. Sales had risen slightly to €10 million from €9.7 million over the 12 months.

Chief executive Willie Kavanagh said the fall in profitability was directly attributable to piracy. He said the company had maintained its share of the market, which has shrunk by more than two-thirds in the last five years – during which time its revenues have fallen from €22 million.

Mr Kavanagh said in the course of its current financial year there has been a further 15 per cent decline in music sales. He said sales of films on DVD have fallen at a similar rate in the last year.

In 2010 the High Court noted a provision stopping internet service providers from allowing access to pirate sites was needed to align Irish law with EU requirements. The Government has pledged to publish details of an order that will do this later in the month.