October 07, 2006
Fascinating liitle contretemps over the Russian download site, Allofmp3.com:
The website claimed to have signed up thousands of new customers since Ms Schwab criticised it in Washington on Wednesday. She said: “I have a hard time imagining Russia being a member of the WTO with a website like that operating.”
Ilya Levitov, a company spokesman, told The Times: “We are getting more than 5,000 new customers a day. The problem for the Americans is not copyright but our business model and our prices, which are killing their business.
“We sell songs for 15 or 20 cents and they want to keep their CD prices. Of course, the American Government is trying to help their companies to get richer. If we sold songs for $1 there would not be any problem, but you can’t sell music here at that price. It would be the same as two bottles of vodka for one song, and nobody in Russia can afford that.
“We understand that the Americans don’t like it, but we are not breaking any laws here. We are a Russian company operating in Russia and this is just double standards.”
The first thing to realize is that Russian copyright law may or may not cover their activities: exactly what is Russian law on any subject is a little difficult to discern on most matters. However, let's make a leap of faith and and say that the rules are the same as they are here in the UK (not all that much of a leap. I don't know, obviously, but great chunks of foreign law, especially commercial, were adopted in the 90s.)
There are several different royalties that should be paid dependent upon the technology at issue. If you are operating like a radio station (streaming for example) then you should pay the songwriter's royalties. You do this by getting a licence from the Performing Rights Society and they've got a number of models, including one where you simply give up a portion of your advertising. Simple.
Perhaps most importantly in this case, the copyright owners have no right to stop you from playing this piece of music.
When you sell a recording however, you have to pay artists' royalties and maybe they are claiming that they are indeed paying these. However, there's one fly in this ointment. If you change the format (for example, rip a CD track into an MP3 file) then you must ask permission of the copyright holder to do so. You can't just go off and do it then send the money, permission must come first.
That's obviously the bit that Allofmp3.com aren't at the moment doing so under UK law they would presumably be shut down.
Whether Russian law includes this distinction or not who knows?
Where it gets even more convoluted is the question of which law applies? That where the servers are? Or that where the download takes place? As far as anyone has tested this so far it would appear to be where the download takes place. This is certainly true of libel (Dow Jones had to cough up on a story about an Australian read by perhaps 40 people in Australia, taken from its New York based feed), was true of things like Nazi memorabilia (Yahoo had to make sure no one in Germany could see auctions of such stuff) and so on.
So, constructing a great pile of law out of surmises and suppositions, I'd say that even if Allofmp3.com was legal in Russia (which it may or may not be), the downloads from it to machines in the UK would not be.
Whether this is likely to shut down the site, or even cramp their style, I have no idea, but I wouldn't be looking at a NASDAQ flotation anytime soon if I were you.
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> I'd say that even if Allofmp3.com was legal in Russia (which it may or may not be), the downloads from it to machines in the UK would not be.
That's certainly the legal opinion I've been given whenever I cover this story - although I can't imagine the likelihood of prosecution is very high. So far at least the legal efforts of the record industry have been aimed at sharers, not downloaders.
Posted by: Gary | Oct 7, 2006 9:37:47 AM
All laws ultimately require enforceability. When the US makes it illegal for bankers in Britain to sign contracts that breach American law it only works because the UK government co-operates. The Russians are unlikely to be so obedient.
What happens if Lichtenstein inttoduces a law requiring extra payments worldwide to companies registered there - obviously nothing since Lichtenstein isn't a super power but the legal question is the same.
Posted by: Neil Craig | Oct 7, 2006 2:35:18 PM
Makes you pine for the days when the USA wouldn't recognise copyright law, and purloined foreign writers' works. People like poor old Dickens were obliged to actually go there and give readings if they were to make any dollars out of their writings.
Posted by: dearieme | Oct 7, 2006 3:27:10 PM