Net] AllofMp3 fights back

Begin forwarded message:

From: Dewayne Hendricks <[email protected]>
Date: October 19, 2006 10:09:26 AM EDT
To: Dewayne-Net Technology List <[email protected]>
Subject: [Dewayne-Net] AllofMp3 fights back
Reply-To: [email protected]

[Note:  This item comes from reader Steve Schear.  DLH]

> From: Steve Schear <[email protected]>
> Date: October 18, 2006 10:28:23 AM PDT
> To: [email protected]
> Subject: AllofMp3 fights back
>
> Mediaservices, which operates the popular and controversial  
> allofmp3.com music site, is convinced that its business model is  
> legitimate and that it maximizes demand for music and spurs  
> consumers to buy more music. The company believes that everyone  
> wins, record labels, artists and distribution companies when the  
> market is broader and deeper. Relying on a handful of artists for  
> the majority of sales is an outdated. One October 17th they held an  
> on-line Press conference to address issues related to on-line music  
> distribution and erroneous piracy characterization by U.S. Trade  
> Representative Susan Schwab.
>
> Although the RIAA and IFPI, their international equivalent, have  
> tried to portray music purchases from allofmp3.com by U.S. and  
> Western consumers as illegal (in order to dampen demand) there is  
> no creditable evidence fort this (see Background, below)
>
> [There are widespread rumors that there are Interpol warrants for  
> the arrest of Mediaservices executives.]
>
> http://www.breitbart.com/news/2006/10/13/309-10132006.html
>
> A transcript of the press conference.
>
> http://www.musictowers.com/features/ViewArticle1813.aspx
>
> Of note is the substantial alleged penetration of allofmp3 into  
> U.K. on-line music sales. Although it may be risky to extrapolate,  
> I estimate that allofmp3's U.S. music sales are easily several  
> times that U.K. and may be up to 5% of U.S. on-line music sales.
>
> BACKGROUND
>> Since November 2003 the web music merchant www.allofmp3.com,  
>> operated by the Russian company Media Services, has been openly  
>> selling some of the most popular western music at a fraction of  
>> the cost of widely touted American sites, such as Apple's hugely  
>> successful iTunes, Rhapsody, MusicMatch, Napster, Sony Connect.  
>> Clients can select from a wide variety of encoding options (e.g.,  
>> AAC, MP3, OGG, WMA 9 Lossless, Monkey's Audio, OptimFROG and FLAC)  
>> starting at rates of 128kbps all the way to full CD (.wav files).   
>> Unlike its major competitors Allofmp3 sells the tracks by the  
>> megabyte.  Beginning in January rates were doubled to USD 0.02/ 
>> MB.  Instead of paying USD 1.00 per track AllofMP3 users pay less  
>> than USD 0.10 and less the USD 2.00 per album.  Currently the site  
>> boasts almost 30,000 albums from all genre and it all appears  
>> legal for the moment.
>>
>> The legal skinny
>> How does ALLofMP3 prevent being shut down? They do it the old  
>> fashion way: legally. There is a loophole in the Russian copyright  
>> legislation that makes services like Allofmp3 possible. Apparently  
>> this loophole cannot be closed easily.
>>
>> Allofmp3 has signed agreements for this with Russian Organization  
>> for Multimedia & Digital Systems (<http://www.roms.ru>www.roms.ru).
>> According to their license <http://www.allofmp3.com/index2.shtml? 
>> affiliate=nl13>allofmp3, has the right to use musical compositions  
>> by providing downloads. Under the license agreement Allofmp3 pays  
>> out fees to ROMS for downloaded materials that are subject to the  
>> Russian Federation Copyright And Related Rights Law. ROMS is a  
>> member of CISAC (<http://www.cisac.org>www.cisac.org) - the  
>> International confederation of authors and composers societies.  
>> ROMS manages intellectual rights in the Russian Federation. All  
>> third party distributors licensed by ROMS are required to pay a  
>> portion of the revenue to the ROMS. ROMS in turn, is obligated to  
>> pay most of that money (aside from small portion it needs for  
>> operating expenses) to artists. Both Russian and foreign.
>>
>> This license is only supposed to allow content to be sold to  
>> Russians. The site doesn't appear to do non-Russian advertising  
>> and promotion, though they do have an English version of the site  
>> available (they say its to address problems with Russian language- 
>> encoding standards which existed they launched but that many  
>> Russian nationals living outside of the country prefer to use the  
>> English version for browsing). They claim its a site created for  
>> Russians but those who come to their site from abroad are welcome  
>> and are provided with full service.  Sales to non-Russians are  
>> said to be 'insignificant' but I rather think its because their  
>> management has wisely chosen a Russian processor www.cyberplat.com  
>> that does not offer AllofMP3 direct access the information from  
>> user credit cards. They get only notifications about successful  
>> transactions. Plausible deniability is as smart in business as  
>> politics.
>>
>> The Music Industry claims that Allofmp3 is illegal but their own  
>> lawyers tell them "... the music industry doesn't have much chance  
>> in succeeding (if they attack these companies who are using music  
>> files on the Internet under current Russian laws)."  Instead they  
>> are pushing for changes in Russian copyright law but progress is  
>> glacial.
>> Chances that the loophole will be closed on short term are low and  
>> there is great resistance to changes.
>>
>> As for the legality of non-Russian clients downloading from  
>> allofmp3 this is country dependent.  In countries with liberal  
>> copyright protections, like the Netherlands, downloading is  
>> legal.  In countries with stricter copyright protections its less  
>> clear.
>>
>> MP3's, OGG's, etc are not illegal in the USA and therefore can be  
>> imported. There is also no law against importing music from other  
>> countries (including Russia). Because you are buying this legally  
>> in Russia and then importing to the USA, this should be 100%  
>> legit. The only applicable U.S. law appears to relate to the  
>> "Infringing importation of copies or phonorecords".  But even this  
>> statute "...does not apply to importation, for the private use of  
>> the importer and not for distribution..."  If MP3's, OGG's etc are  
>> in fact considered phonorecords, U.S. citizens can legally buy  
>> these as long if they are for private use and not for  
>> distribution. If MP3s, OGG's etc. are not considered phonorecords,  
>> no import laws apply. The sections of digital audio recording and  
>> sound recording have no mention of importation. Bottom line:  
>> Downloading from Allofmp3 is legal for U.S. Citizens, as long as  
>> the files are for private use and not for distribution.
>>
>> More details of the legality can be found at http:// 
>> www.museekster.com/allofmp3faq.htm