Thursday, June 08, 2006
Digital Ethics #14: AllofMP3.com
AllofMp3.com. The very name conjures up either great respect or distain. Copyright holders continue to pressure the Russian government to obliterate this music service; while consumers enjoy high quality music at a cut-rate price.
AllofMp3.com has managed a extraordinary level of popularity because many feel it represents what an online music service should be. The music service contains no DRM (Digital Rights Management), allowing the consumer to copy and transfer the purchased track to whatever device he or she wishes while compensating artists.
In addition, AllofMp3.com's selection of file formats rivals, if not exceeds, that of many P2P networks. Most tracks are available in a variety of formats, including MP3, OGG, FLAC, WMA, and AAC.
Above all, the price of AllofMp3.com has allowed this service to rival the popularity of iTunes, and exceed that of Napster in the United Kingdom. Unlike most authorized download services which charge a flat rate of 99 cents per file, AllofMp3.com charges by volume. Each megabyte costs 2 cents, therefore the greater the quality the greater the price. For example, a 320 kbps bitrate MP3 from AllofMp3.com may end up costing the customer a whopping 8 cents while a 128 kbps may be as little as 4 cents.
The entertainment industry however claims the service is flat out illegal. According to the IFPI (International Federation of the Phonographic Industry), AllofMp3.com fails to pay artist royalties - contrary to AllofMp3.com's assertions. In their press release titled "Setting the Record Straight", the IFPI claims,
"Allofmp3.com is not a legal service either in Russia or anywhere else. It is distributing music without any permission from the artists or copyright holders. Unlike all the legitimate sites, it does not pay artists or copyright holders so it is effectively stealing from those who create music. Like most things that appear to be too good to be true, allofmp3.com is not what it seems."
Two separate Russian investigations into MediaServices (the company that owns AllofMp3.com) are currently underway. One investigation is probing the former owner of MediaServices, while a new investigation examines the current owner. The previous investigation met with failure when the Russian government was unable to find any grounds for prosecution.
The Russian government has recently felt the pressure from Washington to act however, as the United States Trade Represetative's office has specifically cited AllofMp3.com as a "pirate website." It's speculated that Russia's admittance to the WTO (World Trade Organization) hinges on tough copyright enforcement against both physical and digital piracy; including AllofMp3.com.
AllofMp3.com has been quiet on the issue, refusing to answer media inquiries from virtually every source. This policy has changed, as AllofMp3.com has decided, from its point of view, to set the record straight. Of particular note is point number 5, which implies the music service might be negotiating a settlement and a change in price structure.
The US government officials and politicians have been demanding lately that the Russian authorities shut down allofmp3.com, alleging the site is pirate. Otherwise, they threaten Russia with sanctions, including blocking its entry to WTO.
In this regard we would like to make a statement:
1. The site AllOfMP3.com belongs to a Russian company and for 6 years it has operated within the country, in full compliance with all Russian laws. Throughout this period the various government offices have scrutinized site's legality and have not found any breach of the law. So far there has been no decision by any Russian court contesting the site's legality.
2. The Russian site AllOfMP3.com is not operating or advertising its business on the territory of other countries.
3. The site AllOfMP3.com does regularly transfer substantial amounts of royalties to the Russian organizations for collective management of rights such as ROMS and FAIR, which have granted the site licenses to legally deliver music through the Internet.
4. The site AllofMP3.com reserves the right to take all steps necessary to protect its business reputation. We call upon everyone to take a thorough and unbiased view of the site's legality.
5. On September 1, 2006 the changes to the Russian copyright legislation will come into force. Since January 2006 the site has been making direct agreements with rightholders and authors at the same time increasing the price of the music compositions and transferring the royalties directly to the artists and record companies. The aim of AllofMP3.com is to agree with all rightholders on the prices and royalties amounts by September 1, 2006.
6. We believe in the long term and civilized business based on respecting the law, considering the customers' demands as well as the interests of both national and international rightholders.
The AllofMP3.com Administration
June 6, 2006 Moscow
in response, the IFPI (International Federation of Phonogram and Videogram Producers)has released this statement:
Allofmp3.com: setting the record straight
Allofmp3.com is not a legal service either in Russia or anywhere else. It is distributing music without any permission from the artists or copyright holders. Unlike all the legitimate sites, it does not pay artists or copyright holders so it is effectively stealing from those who create music. Like most things that appear to be too good to be true, allofmp3.com is not what it seems.
The site claims to have a licence from ROMS, a Russian organisation that claims to be a collecting society. Yet ROMS has no rights from the record companies whatsoever to licence these pieces of music. ROMS and allofmp3.com are well aware that record companies have not granted authorisation for this service.
Downloading from allofmp3.com is illegal in most countries. Consumers should not be fooled by allofmp3.com but download from one the great value licensed and legitimate sites instead. Allofmp3.com clearly violates rules enshrined in national copyright laws and international copyright treaties, notably those established in the EU Copyright Directive and World Intellectual Property Organisation (WIPO) Treaties. Even if one took allofmp3.com's license from ROMS as legitimate, which it is clearly not, it would still have no extra-territorial effect. As the site itself acknowledges 'you are not able to download audio and video from AllOFMP3.com if is in conflict with the laws of your country of residence.' [sic];
Legal action is being taken against allofmp3.com. There are two separate criminal proceedings ongoing in Russia regarding Allofmp3 directly. The first case is against the former director of MediaServices (the company that owns and runs the Allofmp3 service). The public prosecutor in Moscow has taken on this case and it is now in the trial phase. The second case is against a current director of MediaServices. This case remains in the investigation phase and again will be closely followed by IFPI.
In May 2005 a German court granted a preliminary injunction against the site saying that it had no right to offer music in Germany without the proper rights holders' consent. In October 2005 the Italian authorities shut down a portal, allofmp3.it, and began a criminal investigation into it.