It was first reported by the Washington Post last week that the RIAA was suing the Russian online music distribution company Mediaservices, which owns AllofMP3.com and allTunes.com, for illegally selling copyrighted music.

The companies behind the claim, which include the major record labels Arista Records LLC, Warner Bros. Records Inc., Capitol Records Inc. and UMG Recordings Inc., filed the suit in a New York federal court claiming that “…Mediaservices’ sites sell millions of songs by their artists without paying them ‘a dime’ for the right to do so.”

“Defendant’s entire business … amounts to nothing more than a massive infringement of plaintiffs’ exclusive rights under the Copyright Act and New York law,” according to the lawsuit.

As part of their claim, the labels are seeking $150,000 USD for each of the 11 million songs that were downloaded from June to October 2006 from the AllofMP3.com website.

Now how much money the site has made is unknown but, certainly its profits are not in the trillions of dollars.

“AllofMP3 understands that several U.S. record label companies filed a lawsuit against Media Services in New York,” an unnamed “senior company official” stated. “This suit is unjustified as AllofMP3 does not operate in New York. Certainly the labels are free to file any suit they wish, despite knowing full well that AllofMP3 operates legally in Russia. In the mean time, AllofMP3 plans to continue to operate legally and comply with all Russian laws.”

What he has to say is true, for isn’t AllofMP3 currently complying with Russian copyright laws?

As I previously reported, technically AllOfMP3 does obey the law-Russian law. It pays the standard 15% Russian licensing fee that applies to online music to ROM, the Russian Organization for Multimedia & digital systems. ROM is the Russian equivalent of the RIAA, and according to their website they are “…the national Russian organization providing professional collective management of authors’ property rights and protection of interests of rights holders in cases of use of their works in digital interactive networks, including the Internet.” But, unfortunately for AllOfMP3 the RIAA doesn’t recognize ROM’s legitimacy, perhaps out of fear that it would help legitimize AllOfMP3 and erode their position against it.

Furthermore, considering that they already have online distribution deals with other companies like Microsoft and Apple for instance, it stands to reason that it is not that copyright infringement is the concern but, rather the amount in royalty payments that the Russian sites are required to pay.

After related recent events in which the RIAA was demanding a cut of the profits from every one of Microsoft’s Zune players sold, as well as talk that it would seek a similar arrangement in future deals with Apple’s iTunes, it’s no wonder that the RIAA wants to make sure it gets as much money as it can, consumers and the laws of sovereign countries be dammed.

*UPDATE: From the AllOfMP3 site
An attempt by the major record labels to use a U.S. court to as part of its campaign against AllofMP3.com is imprudent.
AllofMP3 understands that several US record label companies filed a lawsuit against Mediaservices in New York. This suit is unjustified as AllofMP3.com does not operate in New York. Certainly the labels are free to file any suit they wish, despite knowing full well that AllofMP3.com operates legally in Russia.
In the mean time, AllofMP3.com plans to continue to operate legally and comply with all Russian laws.

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SOULXTC: “walkin’ the streets of P2P”

Head of the “Notorious Markets”

The first item of distress for AllOfMP3’s is its status as a sticking point in the ongoing WTO negotiations between Russia and the United States. Russia has been trying to join the WTO since the early 1990s and is the last of the world’s major economies to not be a member. The United States is the sole remaining major world economy to object to Russian membership and its reasons for doing so are clear. The reason for its objections have been well outlined by outspoken US Trade Representative Susan Schwab.

Using rhetoric like calling it the “head of the notorious markets” to describe it’s sale of what the US considers to be pirated goods, Schwab has made plain her contention that AllOfMP3 must be shut down if Russia wishes to become a member of the WTO. Despite progress in other areas like financial services and agriculture, it is Russia’s lax enforcement of intellectual property rights and the vast quantities of bootlegged music and films that can be found throughout the country that is bringing talks to a standstill.

Oddly enough, what the United States doesn’t realize is that technically AllOfMP3 does obey the law-Russian law. It pays the standard 15% Russian licensing fee that applies to online music to ROM, the Russian Organization for Multimedia & digital systems. ROM is the Russian equivalent of the RIAA, and according to their website they are “…the national Russian organization providing professional collective management of authors’ property rights and protection of interests of rights holders in cases of use of their works in digital interactive networks, including the Internet.” But, unfortunately for AllOfMP3 the RIAA doesn’t recognize ROM’s legitimacy, perhaps out of fear that it would help legitimize AllOfMP3 and erode their position against it.

So technically AllOfMP3 is compliant with Russian intellectual property laws, and the real issue is that its merely illegal for users outside of Russia to use the site. It’s slightly reminiscent of the Internet Gambling Enforcement Act ordeal in the United States that cracks down on the ability of Americans to gamble online, even though of course the rest of the world can. This too is a sad state of affairs, as it makes us look like a real prude in the world, either that or that we’re just too stupid and irresponsible to handle gambling ourselves. It seems as though again the United States plays by rules of “its my way or the highway,” and as always seems the case, it usually gets what it wants in the end. How can you compete against the biggest economy in the world?

The bottom line when all is said and done will be this: How badly does Russia want to join the WTO? If things remain as they are and the RIAA is able to keep US Trade Rep Schwab firmly on their side with the demand that Russia observe US copyright laws, then AllOfMP3 is going to have a tough time convincing the Russian govt that they need to stick together. I think Russian President Vladimir Putin will merely look at where the biggest gains are to be had, and whether it will be it purely through the economics of trade or by flexing a Russian stance of firmness in the face of US pressure. What’s best for Russia may not be what’s best for AllOfMP3, and I think that it will be Putin whom decides this and not the seemingly “trivial” technicalities of Russian copyright law.

Visa and Mastercard Halt Transactions with AllOfMP3

A week ago Visa and Mastercard jointly announced that they would no longer accept credit card transactions from people trying to make purchases on AllOfMP3.

“The action Visa has taken is in line with legislation passed in Russia and with basic international copyright and intellectual property norms,” said Simon Barker, a Visa spokesman.

Mastercard, with comments of it own by its spokesman, Chris Harrall, said that “MasterCard does not tolerate the use of its network for illegal activity.”

Though I wonder if they are both just as diligent about all the illegal activity that their credit cards are used for. I don’t think that question will be addressed in their next press releases.

Again it’s eerily similar to the manner by which the United States was able to effectively bring internet gambling to a standstill. The govt has realized that the best way to accomplish their goals is by going after the money. Stop the flow of money and you thereby stop the flow of goods and services. Nothing is free.

AllOfMP3’s response to the events was both passionate and logical. In a statement they noted:

(This) blacklisting is arbitrary, capricious and discriminatory. Visa and Mastercard had no authority to judge the legality of AllofMP3’s services, and their “determination that the company’s activities were illegal is patently erroneous and without legal merit.
AllofMP3 has not been found by any court in the world to be in violation of any law…To disqualify AllofMP3 based on a payment processing company’s whim is irresponsible and sets a bad precedence.

This is probably the best argument against the whole action by Visa and Mastercard despite the feelings of one side or the other. If you haven’t been convicted of doing something illegal then how can you be treated and penalized as such? Is this the new way of doing things for the RIAA and the IFPI?

Unfortunately, this again is a huge setback for AllOfMP3. If they can’t conduct financial transactions with a large share of their customers then it will obviously drastically reduce their market share and the overall bottom line. Will it be whittled down to site for and by Russians only?

MusicForFree Gets “Cracked”

Still reeling from the heavy pressure exerted by the United States in WTO talks, and the loss of Visa and Mastercard to conduct credit card transactions, AllOfMP3 was then hit by another blow just yesterday. This time it was a blow from the world of technology as a crack for its MusicForMasses program became available. The crack allows users to strip AllOfMP3’s “.MP3X” DRM that it encodes its music with and download it to your PC as a standard MP3 for free.

The crack is probably the most formidable threat to AllOfMP3’s operations, far more so than any legal challenges could ever be. The crack goes to the very heart of its business model and has the potential to drive away customers in a New York minute. The very people savvy enough to use the site, or should I say risk it, are most likely savvy enough to download the crack and get musical selections for free. It reduces AllOfMP3 to nothing more than a mere friendlier version of OINK, and could potentially choke off its profits for good, especially if the crack gets updated each time the flaw in MusicForMasses does.

Danish Court Orders ISP to Block AllOfMP3

The latest setback for AllOfMP3 concerns a lawsuit filed in Copenhagen City Court back in July by the Danish arm of the International Federation of the Phonographic Industry, a trade group for the recording industry. The ruling by the Danish court ordered the Swedish ISP Tele 2 AG to block its customers from being able to connect to the Russian AllOfMP3 website.

“This judgment is one more step along the road to getting this rogue site closed down,” John Kennedy, chairman and CEO of IFPI, said after the ruling. “Allofmp3.com illegally offers for sale copies of music that it has no right to reproduce or distribute.”

Again the argument comes down to the issue of royalties. AllOfMP3 says that it is indeed collecting royalties properly and paying them them to ROM, the Russian licensing group but, the RIAA and IFPI counter that ROM doesn’t have the authority to collect and distribute them. In fact, they both continue to refuse to collect any of the royalty monies accumulated thus far.

Though the country of Denmark is a far cry from the impact that would be felt if a larger country like the UK, for example, where AllOfMP3 claims a 14% market share of all music downloads, it nonetheless sets a bad precedent for what is sure to be an unrelenting attack.

What Next?

What the future holds for AllOfMP3 is anybody’s guess but, I have a feeling that ultimately it will be the Russian President Vladimir Putin who has the final word. Considering the way that newfound petrol dollars have emboldened Russia to take a firmer stand in world affairs, the notion of kowtowing to US laws in the face of preexisting Russian ones seems unlikely. Yet, perhaps it may also settled in a tried true capitalist fashion-dollars and cents. If the world community chokes off its ability to sell its product then economics will trump even the best of its abilities to survive. Time will tell.

SOULXTC: walking the streets of P2P

Unable to shut the site down in Russia after years of trying, the IFPI has recently tried to cut off AllofMP3 from the other end—making it difficult for users to connect to the site and harder for the site to accept international credit cards. As we reported a week ago, the IFPI was responsible for bringing AllofMP3 to the attention of Visa, which stopped processing payments in early September. The recording industry has also been successful at getting its worries heard by politicians; the US Trade Representative, for instance, has publicly called AllofMP3 one of the most significant obstacles to Russia’s bid to join the WTO.

Going after ISPs is only the next logical step. IFPI Denmark sued Tele2 in Copenhagen City Court back in July, asking a judge to force the ISP to cut off access to AllofMP3.com. Yesterday, the judge agreed to do so. John Kennedy, head of IFPI, said: “This judgment is one more step along the road to getting this rogue site closed down. Allofmp3.com illegally offers for sale copies of music that it has no right to reproduce or distribute. It provides unfair competition to the nearly 400 legal sites worldwide that respect the rights of composers, artists and record producers.”

Ib Tolstrup, who leads a Danish telecommunications industry group, told Computerworld Denmark that the decision could have dire consequences for the entire industry. “We are horrified over this judgment, to say the least. It means that we must now keep an eye on what our users are doing online. And blocking user access to certain websites will never be a perfect solution,” he said. “This can spread anywhere. Next time we might be asked to block pages with illegal software or something like that. But we will always demand a court order before acting on these requests.”

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AllofMP3 has been outmaneuvered by a new crack that has become available for their MusicForMasses program, allowing users to strip a song’s DRM and save it to their PC. MusicForMasses normally allows a user to play any of the songs from AllOfMP3’s vast music library for free before they purchase. Well, with this crack you can then download the songs onto your PC for FREE!.

Now, why anybody that knows about “hacks” or “cracks” would not just use that beloved site OINK, from the BitTorrent community, is beyond me. But, considering there’s no pesky “share ratio’s” it could be an easy alternative.

I tried it out to see if it performed as advertised and it did indeed work. So, if you’re looking to perform one of the great works of modern day copyright irony and down song illegally form an allegedly illegal download site, then by all means go forth and try it out.

CLICK HERE TO DOWNLOAD THE ALLOFMP3 CRACK

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