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RUSSIA: Russian Download Site Is Popular and Possibly Illegal

by Thomas CramptonInternational Herald Tribune
June 1st, 2006

Rising consumer popularity is turning AllofMP3.com, a music downloading service based in Moscow, into a global Internet success story, except for one important detail: The site may well be illegal.

So great is the official level of concern about AllofMP3 that American trade negotiators darkly warned that the Web site could jeopardize Russia's long-sought entry into the World Trade Organization.

Operating through what music industry lobbyists say is a loophole in Russia's copyright law, AllofMP3 offers a vast catalogue of music that includes artists who have not permitted their work to be sold online — like the Beatles and Metallica — at a fraction the cost of services like Apple Computer's iTunes service.

Sold by the megabyte instead of by the song, an album of 10 songs or so on AllofMP3 can cost the equivalent of less than $1, compared with 99 cents per song on iTunes.

And unlike iTunes and other commercial services, songs purchased with AllofMP3's downloading software have no restrictions on copying.

It is an offer that may seem too good to be true, but in Russia, considered to be a hotbed of digital piracy and theft of intellectual property, courts have so far allowed the site to operate, despite efforts by the record labels Warner, Universal and EMI to aid prosecutors there.

Music industry officials say AllofMP3, which first came to their attention in 2004, is a large-scale commercial piracy site, and they dismiss its claims of legality. "It is totally unprecedented to have a pirate site operating so openly for so long," said Neil Turkewitz, executive vice president of the Recording Industry Association of America, who is based in Washington.

People associated with AllofMP3, which lists no telephone contacts on its Web site, declined to comment for this article when tracked down by domain-name ownership records kept by Verisign. Those records show that Ivan Fedorov of Media Services in Moscow is the owner.

AllofMP3.com says on the site that it can legally sell to any user based in Russia and warns foreign users to verify the legality within their countries for themselves. The site features a wide selection of Russian music, but is written in English with prices listed in United States dollars.

AllofMP3 asserts its legality by citing a license issued by a collecting society, the Russian Multimedia and Internet Society.

In most countries, the collecting societies that receive royalty payments for the sale or use of artistic works need reciprocal agreements with overseas copyright holders, according to agencies that represent right holders.

According to Russia's 1993 copyright law, however, collecting societies are permitted to act on behalf of rights holders who have not authorized them to do so. Collecting societies have thus been set up to gather royalties for foreign copyright holders without their authorization. Infringement cases have also affected foreign-produced software, films and books.

The result is that numerous organizations in Russia receive royalties for the use of foreign artistic works, but never pass on that money to the artists or music companies, according to the International Confederation of Societies of Authors and Composers, the umbrella organization for collecting societies.

"These collecting agencies are thieves and frauds because they accept money while pretending to represent artists," said Eric Baptiste, director general of the confederation. "They play off a bizarre aspect of the Russian law that we are lobbying to change."

Consumers have been flocking to the site, particularly from Britain, where a survey in March ranked AllofMP3 second only to iTunes in popularity among self-described music enthusiasts surveyed by XTN Data.

Amazon.com's Web site rating service, Alexa, ranks AllofMP3 as having the 986th highest level of traffic of any site on the Web over the past three months.

Use in the United States reached 345,000 unique visitors in April, an increase of 57 percent over January, but a tiny fraction of the 19 million that used the iTunes software online, according to Comscore, a service that monitors the habits of Internet users.





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