While Napster, iTunes, WalMart and other online music retailers sell songs for 75 cents to 99 cents each, AllofMP3.com had nearly as large a selection and sold tracks for a mere 10 cents apiece or entire albums for $1 apiece.
The US-based music industry cried foul, and the US Department of Commerce agreed, making the closure of AllofMP3.com a requirement in Russia's 2006 attempt to join the World Trade Organization. Eight online music sites in Russia were shut down, and criminal charges brought against their owners in July, prior to the WTO Summit.
The company's website made clear that users should make sure the use of AllofMP3.com did not violate copyright laws in their home country.
No news on the RIAA Lawsuit against AllofMP3.com, where they are asking for $150,000 in damages for each of the 11 million songs in their catalog, or a $1.65 Trillion lawsuit.
In Russia, the copyright law requires that selling copyrighted material is legal, if a 15% royalty payment is paid to ROM, the Russian Organization for Multimedia and Digital Systems. Oleg Nezus, speaking for ROM, says that all of the major record labels have royalty payments waiting for them in Russia, but EMI and Universal have refused to accept their payments - not wanting to send the message that 10 cent downloads are adequate for their constituents.
Zemchenkov, of the Russian Anti-Piracy Organization was praising Russia's newly beefed up anti-piracy laws, which carry penalties of up to six years in prison for DVD pirates, as recently as April -- see: Hollywood Reporter: Putin Beefs Up Penalties for Piracy. Now, he is saying this lack of action against AllofMP3.com "sets a very bad precedent".
Zemchenkov, whose organization has the support of the Motion Picture Association (MPA), has been active in the Coalition for Intellectual Property Rights, and has attended all of the meetings of the "Russian Federation IP Working Group". CIPR also produces a monthly newsletter about IPR issues in Russia. In their most recent issue they conclude their summary of the case with this statement:
the court was not convinced that EMI, Warner and Universal Music have rights to the music sold by Allofmp3
citing as their source this August 16th article in vedomosti.ru:
Вину Allofmp3 не доказали (Not Guilty Allofmp3 Vindicated)
Суд оправдал бывшего гендиректора “Медиасервисез”, владевшей музыкальным интернет-магазином Allofmp3. Прокуратура обвиняла его в нарушении прав звукозаписывающих компаний, но суд не нашел доказательств того, что EMI, Warner и Universal Music действительно владеют правами на музыку, которую продавал Allofmp3.
Which means (gar's rough computer-assisted translation):
Court absolved former general director MediaServices who owned the internet music shop Allofmp3. The office of the public prosecutor accused it of violating the rights of the production companies, but the court did not find evidence that EMI, Warner, and Universal Music really own rights for the music which was sold on Allofmp3.
The prosecutor in the case, had claimed that from September 4, 2003 until December 1, 2005, Kvasov had infringed on the rights of Universal, Warner, and EMI by distributing music for which they owned the rights.
The ruling went on to find there was no reason they could not return to business, which AllofMp3.com announced on their website this morning with the headline "The Service Will Be Resumed".
The press release, dated August 31st, says:
"The service will be resumed in the foreseeable future. We are doing our best at the moment to ensure that all our users can use their accounts, top up balance and order music."
This is a major blow to copyright holders around the world, as it sends a message that as long as you pay your license fee to the Russians, you can sell anything you want for any price you want. The Russians did have 1600+ arrests for copyright infringment in 2006, but it is believed these were cases against people who hadn't paid their local "fees".
A survey of Intellectual Property brand owners conducted in 2006 by CIPR had found that 6% believed the situation with regards to IPR in Russia had improved significantly while 46% believed it had improved slightly. (See Survey Results). I wonder what they will think after this ruling?
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