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Former Allofmp3.com Owner Faces Jail Time

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From a consumer standpoint, Allofmp3.com was pretty close to the perfect music service — dirt cheap, easy to use, and the choice of how you wanted your music encoded. Oh, and no DRM.

But mix in the RIAA, the WTO, and a couple major world governments, and you’ve got a recipe that ends up hurting consumers and potentially landing a man in jail.

The Beginning of the End

To our good friends at the Recording Industry Association of America, Allofmp3.com was a nightmare typical of the myriad of nightmares that you’d expect to encounter if you were a company that was as clueless, technophobic, and self serving as the RIAA.

When the RIAA finally caught wind of Allofmp3.com, it set out to do what it does best — sue. Problem was, Allofmp3.com wasn’t doing anything illegal (I’ll explain in a bit). So the RIAA did the next best thing it could think of and lobbied the hell out of its government buddies to force Russia to shape up its stance on intellectual property rights or risk its seat on the World Trade Organization.

To be fair, Russia did what any other country would have done. It made an example out of Allofmp3.com in order to secure its place in the global economy. Tough but fair.

What’s not fair is that Russian police are now trying to throw Denis Kvasov, Allofmp3.com’s former owner, in jail citing that he owes the record companies a bunch of money.

Here’s where things start to get interesting.

Legal Issues

As with many disruptive technologies, Allofmp3.com basically broke laws that haven’t been invented yet — at least not in Russia.

Without getting into the finer details of how Russian copyright law is structured, the basic premise is that collecting societies, as they’re known, are allowed to license music to companies without first securing permission from the music’s copyright holder.

A body known as the Russian Organization for Multimedia and Digital Systems (ROMS) is one such collecting society. ROMS licensed music to Allofmp3.com, who in turn gave ROMS a 15% cut of its revenue. Most of that revenue is paid by ROMS to the copyright holders if, and only if, they ask to be paid. By asking to be paid, copyright holders must sign an agreement with ROMS basically acknowledging it as a legitimate collecting society.

So Allofmp3.com’s stance has been that it’s offered to pay the record companies but the record companies never accepted the offer.

Another thing to consider is that in Russia, a CD costs about $3. So Allofmp3.com’s prices, to Russians, were similar to what we Americans pay on iTunes. It just so happened that Allofmp3.com was able to enjoy a little collateral cash (millions, actually) from Americans who didn’t feel like paying full price for music. It’s not that Allofmp3.com started for the sole purpose of selling deeply discounted music to Americans — its main user base was its own citizens — it just happened to turn a blind eye to everyone else from around the world using its service.

Won’t Somebody Please Think of the Consumers (and Denis)?

And why wouldn’t we use it? Allofmp3.com had the trifecta of useability, value, and choice going for it. It was easy to use like iTunes, it was affordable and DRM-free like eMusic.com, and it offered multiple bitrate selection like no other.

Still, it looks like Denis Kvasov might get to play the part of scapegoat in this story as Russian authorities pursue a 3-year, 15 million ruble fine while at the same time conveniently neglecting to notice the very Allofmp3.com-like MP3sparks.com site that’s risen from the old site’s ashes. As a Russian citizen, Kvasov’s done nothing illegal under his country’s laws — a point that’s proven by the mere existence of MP3sparks.com.

Should MP3sparks.com become a permanent fixture, consumers will ultimately end up winning this one. But it should be a bittersweet victory if it’s at the expense of a man’s freedom.

Russian prosecutors seek jail time for Allofmp3.com owner [CNet News.com]

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