The Russian music download site Allofmp3.com has finally closed after years of controversy. The site – which was the second largest online music retailer in the UK after iTunes – sold songs for between 10 and 20 US cents each and was widely criticised within the record industry for illegally selling music.
To legally sell music online, companies must obtain licences from the copyright holders, typically recording companies, to authorise the sale of music downloads. In many countries, collecting societies negotiate reciprocal agreements with overseas copyright holders to ensure royalty payments for the sale or use of artistic works are distributed to the correct collecting society or person.
Russian download sites have been exploiting a loophole in a 1993 Russian copyright law that enables them to sign licences with Russian royalty collection and rights agencies, such as the Russian Multimedia and Internet Society (ROMS) despite the fact that those agencies have no agreement with the overseas record companies and artists whose music they are licensing.
In the face of accusations of piracy from industry bodies worldwide, Allofmp3.com stated that it made clear on its website that customers must ensure compliance with their local intellectual property laws before purchasing any music and maintained that it paid royalties to ROMS. However, the vast majority of major record labels do not recognise ROMS and many industry bodies, such as the International Confederation of Societies of Authors and Composers, assert that although ROMS may receive royalties for the use of artistic works, those payments are never passed on to the appropriate company. The British Phonographic Industry confirmed that no artists or record companies in the UK have ever received any money from ROMS or Allofmp3.com.
The RIAA (Recording Industry Association of America) is a fierce opponent of copyright infringement and has repeatedly brought lawsuits against individuals involved in piracy. On the 18th December 2006 it filed a $1.65 trillion lawsuit against Allofmp3.com on behalf of EMI, Sony, Warner Music Group and Universal Music Group. This amounts to $150,000 per track of the 11 million songs downloaded between June and October in 2006 and it exceeds Russia's entire GDP.
Pressure to close the site was eventually exercised at governmental level after anger at the apparent lack of action by the Russian government to intervene to close such sites down and enforce intellectual property rights. Russia has been keen for the past 13 years to negotiate entry to the World Trade Organisation, which is strongly opposed by politicians and the music industry who want Russia to enforce an IP regime that is in line with TRIPS (Trade Related Aspects of Intellectual Property). Entry to the WTO is subject to coming to a mutually acceptable bi-lateral deal with any existing member state which wants one, as well as an overall undertaking given by the applicant state to the full body of members to bring its trade rules and regulations into line with WTO norms. The US is one of the countries that have sought such a deal and it made the removal of Allofmp3.com and other such sites an explicit and non-negotiable condition of accession to the WTO.
The removal of the site appeared to have brought Russia's accession to the WTO closer and a bilateral agreement has been signed between the United States and Russia. Allofmp3.com's owner, MediaSite, has created two new copycat services, Mp3sparks.com and Memphismembers.com, however, which serves to highlight the difficulties that Russia and other states will face in ensuring the international enforcement of copyright and other intellectual property rights in a global economy.