Record labels, internet
AllofMP3, the music download website whose activities threatened to scupper Russia’s entry into the World Trade Organisation (WTO), has been shut down. The site, Allofmp3.com has shut as the Kremlin sought to end criticism from the United States that Russia was failing to clamp down on music and video piracy and Russia promised to target other Russian sites that distributed copyright material illegally. However, an alternative site run by the same Moscow company has already emerged – mp3Sparks.com and owners MediaServices say it is legal under Russian law, using many of the same arguments advanced in support of allofmp3.com. Allofmp3.com insisted that it was a legitimate business because it paid royalties to a Russian organisation that collected fees for distribution to copyright holders. It argued that it was helping to prevent piracy by offering an alternative to free file-sharing sites. Western music companies refused to accept the fee, arguing that the Russian Multimedia and Internet Society had no right to represent their interests. The site had been under investigation for two years by the Russian Interior Ministry. A bigger blow was struck in January, when Visa and MasterCard told MediaServices that they would no longer process payments for allofmp3.com. The site had attracted 5.5 million subscribers buying songs for between 10 and 20 US cents each, compared with 99 cents at Apple’s American iTunes store and 79p in the UK. Most customers were in Russia, but it was estimated to be the second most popular download site in Britain after iTunes. It was set up in 2000 by six computer programmers, who initially developed the site for their personal use then built it into a business earning a reputed $30 million a year. The Mp3Sparks.com is virtually identical to the old site and claims to offer thousands of albums by popular artists for around 15 US cents per song. MediaServices said that the site was registered with the Russian Licensing Societies, which it claimed had the right under Russian law to “grant licences and to collect royalties for the use of music without necessarily obtaining permission from the copyright owners”. The major labels strongly dispute this. However in related news, a Russian court has held that Visa and Mastercard’s earlier actions in cutting off credit cards payments to the Alltunes’ AllofMP3 service was illegal under Russian law. Visa and MasterCard blocked all payments due to the sites’ alleged copyright infringement violating Russian contracts.