Record labels sue operator of Russian music website AllofMP3.com
Thu Dec 21, 10:03 AM
By Alex Veiga
LOS ANGELES (AP) - Several major record labels sued the operator of the Russian music website AllofMP3.com, claiming the company has been profiting by selling copies of music without their permission.
The lawsuit was filed Wednesday in federal court in New York against Moscow-based Mediaservices, which owns AllofMP3 and another music site, allTunes.com.
A slate of major record labels, including Arista Records LLC, Warner Bros. Records Inc., Capitol Records Inc. and UMG Recordings Inc., are behind the lawsuit.
The labels claim Mediaservices' sites sell millions of songs by their artists without paying them "a dime" for the right to do so.
"Defendant's entire business ... amounts to nothing more than a massive infringement of plaintiffs' exclusive rights under the Copyright Act and New York law," according to the lawsuit.
The music companies are seeking a court order against Mediaservices and unspecified compensatory and punitive damages.
A call and an e-mail seeking comment from the Washington D.C.-based spokesman for Mediaservices were not immediately returned.
AllofMP3 typically charges under $1 for an entire album and just cents per track. By contrast, an album at Apple Computer Inc.'s iTunes Music Store and other licensed services typically costs about $10 and a song 99 cents.
Mediaservices has maintained that by paying royalties to a Russian licensing group, the website is in compliance with Russian laws. The music industry contends that the Russian licensing group doesn't have the authority to collect and distribute royalties.
This fall, Visa International and MasterCard Inc. stopped accepting credit card transactions for purchases made at Mediaservices' sites.
Earlier this year, the British Phonographic Industry filed copyright infringement claims against Mediaservices in Britain on behalf of the major recording companies.
Music Labels’ Lawsuit Seeks Shutdown of Russian Online Service
In the latest twist in a worldwide tussle over digital music, several recording companies have sued the operator of a Russian online music service, hoping that the American courts can accomplish what international efforts have not.
The lawsuit, filed Wednesday in Federal District Court in Manhattan, seeks an injunction to prevent the service, AllofMP3.com, from selling copyrighted music without permission and to force the service to surrender its domain names, effectively closing it down.
Recording companies turned to the courts after several other efforts to shut the Russian site, including pressure from United States trade officials, had been slow to yield results.
Though Russian authorities recently agreed to clamp down on services like AllofMP3, the site was defiantly running a “Christmas sale” late yesterday with a 20 percent bonus to subscribers who refilled their accounts.
The Russian site sells albums in some instances for less than $2, a sharp contrast with Apple’s iTunes, which sells individual tracks for 99 cents and full albums typically for $9.99. AllofMP3 also offers music from artists whose recordings are generally not authorized for sale online, like the rock group Led Zeppelin.
The lawsuit also reflects the frustration of major record companies over their inability to end what they view as a pirate service. Record companies have been trying to secure footing in the digital marketplace as they suffer a lengthy slump in CD sales, in part because of continuing piracy.
The suit, which names the service’s Moscow-based operator, Mediaservices, accuses the site of distributing millions of copies of copyrighted music “without paying a dime” to the labels. In addition to AllofMP3, the company runs a service called allTunes, with an interface that resembles that of iTunes.
While music executives have characterized AllofMP3 as a haven for piracy, the lawsuit said the site — which has insisted that it complies with Russian copyright law — could be confusing music fans. AllofMP3’s claims of legitimacy, the suit said, could make it “potentially even more damaging” than more fly-by-night pirate Web sites that cater to music fans who knowingly seek illicit free downloads.
A spokesman for Mediaservices did not return a phone call yesterday.
In the past, representatives for the service have said they have been licensed by a royalty collection organization in Russia. But music executives say that organization, known as ROMS, was expelled from an international confederation of royalty collectors for issuing licenses without authorization from copyright holders.
The increased attention given to the Web site does not seem to have damped its popularity. The service attracted roughly 354,000 unique visitors in November, up slightly since April but still a fraction of the estimated 20.8 million who used iTunes software, according to comScore Networks, a service that monitors Internet users’ habits.
Music executives say the lawsuit was necessary after other recent efforts did not yield the desired results.
In May 2005, the lawsuit said, a German court issued an injunction to block the site from making copies of music available in Germany. Two months ago, a Danish court — prompted by a lawsuit by the Danish branch of the labels’ international trade group — ordered a Swedish Internet service provider to block its customers’ access to the site.
In November, amid talks with United States trade officials, Russia pledged to work to shut down sites like AllofMP3.com as a condition of entry to the World Trade Organization, though its timetable for achieving such a shutdown is uncertain.