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The arrest of an alleged UK reseller of Allofmp3.com vouchers has frightened other merchants on the continent.

Allofmp3.com set up the voucher scheme to get around the removal of its card processing facilities in the UK and Europe last year. But the bust of a London-based reseller earlier this month has prompted his colleagues on the continent to quit the business, a move that would cut off one of the few remaining sources of revenue for the once highly-popular music download site.

An unnamed 25-year-old man, allegedly the UK-based European agent for Allofmp3.com, was arrested under the Fraud Act following a police raid in the east end of London earlier this month. The bust followed an investigation by global recording industry body IFPI and the BPI, the UK record companies' association.

Ars Technica spoke to a number of Allofmp3.com resellers on the continent and found little appetite for continuing in the business, even though local laws probably would not permit the sort of enforcement action carried out in the UK.

"Until a few days ago, I had never heard of the IFPI," one reseller, who spoke on the condition of anonymity, told Ars Technica. "But yes, I am concerned about them now. Although my attorney assures me that reselling gift certificates bought from Allofmp3.com isn't breaking any laws, it isn't worth the possibility of engagement with their legal machine."

Another reseller has already pulled the shutters down on a site selling Allofmp3.com vouchers (a sort of "gift certificate" typically valued at around $10), which contain an access code that allows punters to download tracks from the site. "We made the decision after hearing news about an arrest that occurred in the UK. We do not wish the same to occur to us," the operator said.

Most of the operators concerned are reselling vouchers that allow cut-price MP3 downloads via Allofmp3.com at a small markup, motivated by the desire to assist other members of the Allofmp3 community rather than the desire to earn anything approaching a full-time income from the practice. Those involved believe their business is above board, but aren't prepared to face down the legal wrath of the recording industry to prove a point.

Allofmp3.com says it pays record companies and artists via an agreement with Russian copyright organisation ROMS. The BPI said none of its record companies have allowed ROMS to license the sale of their music via the internet either in Russia or anywhere else. Furthermore, ROMS has been booted out of CISAC, the international copyright confederation.

The Russian download site faces ongoing criminal proceedings in Russia as well as a raft of civil actions against it by the music industry internationally. A change in Russian law could make the site's activities illegal by as early as June 2007, Ars Technica adds.

All of which probably serve to drive music fans towards BitTorrent rather than commercial download services such as iTunes and the like, whose high prices offering little discount from the cost of CDs remain a bone of contention for music fans. ®

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