AllofMP3 doesn't officially support the distribution of files downloaded from its site, but one of its great attractions is that, because it leaves this decision to the end-user, no DRM is imposed. Its encoding possibilities are another excellent feature of its catering to the customer (if you don't know the site, check this page). And, of course, it has the great merit of making music buying so cheap that for the individual user it has some of the economic merits of sharing. But hang on! If I'm not sharing, but instead buying music — more music (because it's so cheap) — then there must be a business model here that the music industry should be interested in. Surely?
You would have thought so. Instead, everyone is a-buzz with the question of AllofMP3's legality (here's a current discussion at Digg), because that's how the music industry has shaped the debate. I want to look at the legal issue (it's undeniably important), but I also want to remember what AllofMP3 represents. Whatever else you might think about it, it's a very well-delivered facility for the online music lover that sells music at such a price, and with such a full quiver of DRM-free encoding choices, it must be doing a phenomenal trade.
First, the legal status. On the Russian site you can read:
All the materials in MediaServices projects are available for distribution through the Internet in accordance with license # LS-3М-05-03 of the Russian Multimedia and Internet Society. Under the license terms, MediaServices pays license fees for all materials subject to the Law of the Russian Federation "On Copyright and Related Rights". All materials are available solely for personal use and must not be used for further distribution, resale or broadcasting. The user bears sole responsibility for any use and distribution of all materials received from AllofMP3.com. This responsibility is dependent on the national legislation in each user's country of residence. The Administration of AllofMP3.com does not possess information on the laws of each particular country and is not responsible for the actions of foreign users.
Museekster has an interview with AllofMP3, exploring key issues such as legality and compensation of artists, and there is another interview with ROMS here, but both interviews date from very early in 2004 (January and February, respectively). A lot has happened since. The Wikipedia page on AllofMP3.com is here, but by far the most legally knowledgeable posting I've come across is from Wahab & Medenica LLC's Biz-Media-Law Blog (an American law firm):
Article 39 of the Russian “Law on Copyright and Related Rights” allows for the broadcast and cablecast of a phonogram “for general public knowledge” without the permission of a performer so long as royalties are paid through collective rights organizations such as ROMS. This has been widely interpreted as creating a compulsory licensing scheme with Internet music sites being classified as “broadcasts” or “cablecasts” for the purposes of this exemption. U.S. copyright law includes compulsory licenses for derivations of musical compositions, or “covers;” however, in order to copy the actual sound recording, a license must be granted by the copyright holder. Unlike U.S. copyright law, under the Russian compulsory license scheme, websites such as AllofMP3 can offer music by the Beatles because they need not receive permission from holders of copyrights to sound recordings. If this is the correct interpretation of Russian copyright law, and AllofMP3 does in fact have the proper license from ROMS, the service is probably legal in Russia.
Organizations such as the International Federation of the Phonograph Industries (IFPI) and the International Confederation of Societies of Authors and Composers (CISAC) have been pressuring Russia to either prosecute these websites or revise the copyright law. CISAC expelled ROMS from CISAC membership in October of 2004 for contravening internationally accepted collective administration principles by issuing licenses to copyright users without being given the authority to do so by copyright holders. Despite this pressure, Russian authorities declined in March of 2005 to take action against AllofMP3.com, reasoning that the Article 39 exception creates a loophole whereby Russian copyright law only covers physical media such as CDs and not digital files. (For more details see alex.moskalyuk.com.) Moreover, according to a recent article in the Register, ROMS has lost the backing of the Russian Authors' Organization (RAO) which the article interprets as placing ROMS in unlicensed waters.
If sites such as AllofMP3.com are legal under a compulsory licensing scheme in Russia, these licenses only apply to music to users within Russia and do not permit the sites to distribute music worldwide. Essentially, digital music files have become a new type of gray market good when sold to U.S. purchasers even though the Russian websites claim that they target Russians exclusively and provide disclaimers stating that users should consult the laws of their own nations. Sites such as AllofMP3.com raise the confounding problem of how one can impose import and export controls on digital files sold legally from a Russian website to U.S. purchasers who download, or import, these files across invisible international boarders. Even if importation of digital music files could be detected and prevented, Section 602 of the U.S. Copyright code permits importation one copy of a copyrighted work without the permission of the copyright holder for personal use.
With the successful defeat of Grokster handed down by the Supreme Court it seems likely that free file-sharing services in the U.S. are likely to decrease. This void may be filled by quasi-legitimate foreign online music sites offering superior service at a fraction of the price compared to a download from popular legitimate U.S. sites such as iTunes. It appears that there is very little that the music industry players can do besides pressure Russia to change its copyright laws, and even if successful in doing this, it is likely to be a slow and laborious process. In the meantime, the music industry should decide what legal actions to take, if any, and how to compete in the constantly changing global environment.
The status of AllofMP3 differs from country to country: GEMA, the German society for musical performing and mechanical reproduction rights, issued a press release in April of last year making it clear that under an amendment to German copyright law it is illegal in Germany for anyone to download from AllofMP3.com, and the Italian portal was shut down in July.
A number of websites, blogs, etc continue to say that ROMS is a member of CISAC, and in this and other respects there is quite a bit of disinformation about AllofMP3 in circulation. Yet as far as I can determine, on the basis of the evidence I've seen, BPI spokesman Matt Phillips, quoted in the Observer in May of last year, also got it wrong when he said that, 'Anyone who is downloading from any Russian website is doing so illegally'. (He went on to say: 'Of course on the grand scale of copyright infringement this is not our number-one priority. We are targeting people who are uploading large amounts of music to the internet and then distributing it via peer-to-peer software. However, we would urge anyone who wants to download music to do so from legal authorised services.') The Observer's own reporter concluded, just before quoting Phillips, 'There has been a lot of coverage of allofmp3 in the international press, which has largely concluded that UK consumers can legally download the music until the dispute is resolved'. (In February 2004, The New Statesman, on their New Media Awards Site, enquired into AllofMP3 and described it as legal. The relevant posting is no longer available online it seems, but I blogged about it here.)
Nevertheless, the legal position does not exactly commend AllofMP3. The music lover who uses AllofMP3 would appear to be using a brilliant facility that is still in operation because of a legal loophole(s). Museekster notes that, in the same Register article as cited above, IFPI's legal adviser for Russia, Vladimir Dragunov, admits: 'Because of these loopholes we don't have much chance of succeeding if we attack these companies who are using music files on the Internet under current Russian laws'. Moreover, like David Berlind I'm left asking, 'If I wanted to make sure the copyright holders got whatever royalties were due to them, how would I do that?'. This must be a major factor in determining how comfortable we feel about the site.
And yet. Much of the attraction of AllofMP3 lies in its addressing, however ambiguously and darkly, the exasperation of customers fed up with the entrenched positions of the music industry on DRM, charges, choice of encoding, etc. This is acknowledged even by a leading industry player such as Richard Wolpert, chief strategy officer for RealNetworks. The WSJ reported (January, 2005, subscriber only; text available here):
Mr. Wolpert acknowledges that U.S. digital-music companies could learn a thing or two from the Russian sites, pointing out that Napster's early success persuaded record labels to open up to the idea of selling music downloads. He says legal services should pay attention, for instance, to the Russian sites' higher sound quality and variety of file types. "It's fair to say they might have some innovative ideas," he says. "In an odd way, that might help push forward the legitimate services."
Museekster carries a translation of a news report from Friday 4 March, 2005 (prime-tass.ru) about Moscow prosecutors refusing to initiate action against AllofMP3: the Prosecutor concluded that, 'distribution of works does not result in making a new copy of the work, but only creates conditions for being utilized by end consumer'. This sounds like an internet-based translation service at work! But through the language I hear the idea of end-user digital freedom being defended.
In one of my favourite quotes from the net, Jon Udell wrote (March, 2004): 'Something wonderful died with Napster: the collaborative discovery and sharing of a wide diversity of music'. AllofMP3 is so cheap there's a social sharing going on — one the music industry should love ($$$): a friend mentions a band and, if they're on the site and you trust your friend's taste, it's so cheap you feel inclined to buy and download their music — or you can first use the excellent 'Preview song' facility. AllofMP3 is not Napster, but it's creating a social buzz that then spins off into sites like Last.fm. More people buying more music, encouraging more people to buy more music …
We can't go on and on repeating the errors of the past. Online digital life has got to change and I note two recent straws in the wind. Neither is about AllofMp3 but both are about the need for realising a new understanding of the digital life (P2P, DRM, charges, etc):
… we hope in the future to contribute actively to developing innovative new ways for consumers to acquire digital content legally, and at a fair price, without succumbing to the oppressive restrictions inherent in today’s DRM technology. PeerPressure
Conceptually, I think the idea of paying a monthly fee and getting to choose from 1000+ movies is what those of us in the “cable generation” consider “normal.” Unlike iTunes’ $2 per television episode, this fits much more naturally in how I regularly consume video content. … the cost [of iTunes video] starts to become a bit much after a while. … If I were a betting man, I’d say that Apple will introduce a subscription service of some kind next week as well. There’s going to be too much pressure not to … Russell Beattie on Vongo
AllofMP3 is surely now so well-known and celebrated that it must represent a challenge to the RIAA, the BPI, the IFPI et al that can no longer be met just by drawn out legal actions across different countries. That's the dull reaction of retreating, defeated and dying armies. The more meaningful challenge is to the business model of the music industry and the blue ocean opportunity here is striking: 'We argue that beating the competition within the confines of the existing industry is not the way to create profitable growth' (with thanks to Tom Peters).
I remember an experiment at school, performed years ago: we took seeds (peas, I think), mixed them with plaster of Paris and made a hard ball which duly split apart as the germinating peas thrust their way out. The force exerted by the germinating seedlings was startling. Is AllofMP3 going to make the traditional form of the music retail industries split apart? Read Julian Bond's post. Don't forget that those who break the traditional ways of doing something are for a long while dismissed, derided and then regarded (too late) as a threat to be stamped on. Think Dyson. Watch Magnatune. Et cetera.
Technorati tags: AllofMP3, AllofMP3.com, downloads, DRM, Napster, RIAA, BPI, IFPI, CISAC
