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A hugely popular seller of music downloads is illegal, according to the music industry, and prosecutions are underway. AllofMP3.com, a Moscow-based service that undercuts iTunes by enormous margins, was accused today of paying nothing to artists.

The website, run by MediaServices Inc, has long protested its innocence. Yet the prices are remarkable: a British shopper can download an album from iTunes Music Store for £9.79; or typically about £0.75 from AllofMP3, which prices its downloads by file size. And the choice is enormous. All those Beatles albums that Apple is not allowed to sell can be found at AllofMP3.com for under a pound.

According to MediaServices, everything is licensed by the Russian Multimedia and Internet Society (ROMS) and the Rightholders Federation for Collective Copyright Management of Works Used Interactively (FAIR). MediaServices says that it pays licence fees "subject to the Law of the Russian Federation". It adds that it is not responsible for the actions of foreign users.

It has been suggested that the service falls through a loophole in Russian law; that public performances of recorded music do not require the authority of copyright holders; that the website pays ROMS and ROMS pays the artists; and that AllofMP3 operates within a grey area of the law.

But this is nonsense, according to the IFPI which represents the recording industry worldwide, with over 1,450 members in 75 countries, including Russia.

"AllofMP3.com is not a legal service either in Russia or anywhere else," IFPI head of litigation Lauri Rechardt told OUT-LAW today.

Rechardt said the site 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," he said. "Like most things that appear to be too good to be true, AllofMP3.com is not what it seems."

Regarding the claim of a licence from ROMS, Rechardt described ROMS as "a Russian organisation that claims to be a collecting society."

He continued: "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."

He urged British consumers to stick to legal services. "Downloading from AllofMP3.com is illegal in most countries," he said. "Allofmp3.com clearly operates outside the international standards for copyright law, established by the EU Copyright Directive and World Intellectual Property Organisation (WIPO) treaties."

Rechardt continued: "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."

The site itself acknowledges: "You are not able to download audio and video from AllOFMP3.com if is (sic) in conflict with the laws of your country of residence."

But recent figures from market research firm XTN Data suggest that AllofMP3's market share, at 14 per cent, is second only to iTunes, with 44 per cent, in the UK. That puts it ahead of Napster (8 per cent), Wippit (6 per cent) and MSN (6 per cent) in digital music sales.

Legal action has begun. There are two separate criminal proceedings ongoing in Russia. The public prosecutor in Moscow is taking a former director of MediaServices to trial. And a second case against a current director of MediaServices is in the investigation phase, according to the 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.

British consumers who buy music from an unlicensed site are infringing copyright. In theory, they could be sued by the music industry. However, the industry's legal action to date has targeted only those who upload music for others to access, using peer-to-peer services like Kazaa.

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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