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Allofmp3.ru - Music Reviews / Press Center / Mediaservices Answers to IFPI Questions

Mediaservices Answers to IFPI Questions

What are your revenues, and what share of them have been distributed to artists or copyright owners? What are your top 10 best sellers, how much has your top-selling artist been paid and can you identify any artist or copyright owner who will confirm they have received payment from Allofmp3.com?

As a privately held company, AllofMP3 is not required to publicly release financial information. As stipulated in our licensing agreement with the Russian Multimedia and Internet Society (ROMS), the company pays 15 percent of its gross revenue. The company also pays 25 percent of gross revenue to the Collective Management of Copyright with Respect to the Use of Musical Works in Interactive Regime (FAIR).

The Copyright Law in Russia is very clear about compensating rights holders. It is not AllofMP3's responsibility to directly compensate the musicians. AllofMP3 is required to obtain a licensing agreement that has been fairly negotiated and the company has secured such an agreement.

How can Allofmp3.com justify its business model by saying it is licensed by Russian-based body ROMS to make available and sell music over the internet, when ROMS does not have the mandate from any of the relevant copyright owners (record producers, authors and music publishers worldwide) to issue such licences in or outside Russia (and was furthermore expelled from CISAC in October 2004)?

Prior to registering the company, AllofMP3 did its due diligence and the company was organized after a complete and thorough examination of the Copyright Law and other relevant laws. After being completely satisfied the company would be in full compliance with all applicable laws, the business was launched.

AllofMP3 operates completely in accordance within Russian law and that extends to the use of copyrighted material. The Russian Federation has enacted provisions that allow for reproduction of songs by Articles 44 and 45 of the Copyright Law. As such, the Copyright Law governs and applies to AllofMP3's activities, and it is the reason why AllofMP3 secured licensing agreements with ROMS and FAIR.

Copyright societies representing hundreds of thousands of composers, authors and music publishers around the world have written to ROMS making it plain that ROMS has received no such rights from them. This means that Allofmp3.com is making copyrighted works available without the permission it needs. When is Allofmp3.com going to stop illegally exploiting the works of composers, authors and publishers?

Again, AllofMP3 lawfully operates is full accordance with the Russian Copyright Law and it is not the company's responsibility to directly compensate the musicians. Indeed, in accordance with Article 44 of the Copyright Law, holders of intellectual property rights may establish non-profit organizations (Management Companies) to protect their intellectual property rights. ROMS and FAIR were created and registered as Management Companies, and therefore are entitled to enter into license agreements with AllofMP3 and other online music companies. The agreement with ROMS and FAIR grant AllofMP3 the right to operate as it is even if the license providers have no agreement with the intellectual property rightsholders.

Furthermore, Article 45(3) of the Copyright law allows ROMS and FAIR to enter into license agreements with AllofMP3 and grant it with the right to use the music without the consent of either authors or recording companies.

AllofMP3 reached a licensing agreement with FAIR on October 28, 2005 and with ROMS on December 23, 2004.

Even without an agreement between ROMS and the rightsholders, it is our understanding that ROMS, in particular, has sent several letters to the major record labels inviting them to collect their royalties. Those notices have been ignored. Furthermore, none of the record companies has contacted AllofMP3 to discuss these matters or seek our assistance. Instead, AllofMP3 has been the subject of typical record company campaign - a coordinated and systematic effort to damage our business consisting of political intimidation, spurious legal action and underhanded activities to hurt the company financially. The campaign is completely misplaced. If the record companies don't believe the Copyright Law is sufficient to protect the works of rightsholders, they should appeal to the Russian Federation government for new laws. If the companies are not satisfied with the level of compensation, they should take up the matter with ROMS. However, we strongly believe a royalty of 15 percent of gross revenue is very robust.

Allofmp3.com's website admits it may not be legal in countries other than Russia, yet it is available in English and even publishes charts from the US, UK, Germany and France. What steps is Allofmp3.com taking to comply with the law outside Russia?

The company does not admit that it may not be legal outside of Russia. In fact, it is difficult to know how the laws of hundreds of nations apply to citizens who purchase music from AllofMP3 and that is why the company placed a legal notice on the website. As an internet-based company, the advisory notice was an effort to instruct and inform customers about their requirement to comply with their local laws.

Legal and policy experts from China to the United States agree that the copyright area, particularly in the Internet age, is a mess. At best, there are conflicting national laws in the copyright area. However, Article 9.2 of the Berne Convention for the Protection of Literary and Artistic Works states in the relevant part that:

It shall be a matter for legislation in the countries of the Union (the countries that signed on to the Berne Convention) to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author.

This section of the Berne Convention clearly provides AllofMP3 the right to operate, since the company is in complete agreement with the Copyright Law of Russia.

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