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Allofmp3.com: The Enemy or the Perfect Model?

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Since the early days of the digital music file sharing and copyright wars, I have said that artists and copyright owners should get paid for their efforts, that uploading or downloading music outside the bounds of fair use and without permission is bad karma, but that the music industry is greedy and shortsighted in its pricing and viciously punitive in its enforcement methods.

Since digital music is typically not of CD sound quality, is less convenient to use than CDs in copy-protected formats, does not come with artwork, packaging, liner notes, or credits, it clearly should cost less than music in CD form – way less.

And yet the most popular legitimate digital music service, iTunes, sells most music at the rate of 99 cents per song, which is about exactly the going CD rate with only the one advantage of song-by-song flexibility. And Apple just got through battling the major labels to keep the price that LOW: the labels wanted to raise the iTunes price and shoot themselves in the foot yet again.

The consumer alternative? The questionable legality, morality, and safety of the free file sharing services. I’ve always thought the beauty and potential of the digital system is in easy user access to the entire range of recorded music at a rate that makes experimentation and “why-not? buying” affordable, encouraging consumers to open their minds and ears to the extraordinary range of wonderful, varied, and surprising music being made: either some kind of license-based all you can eat model, or a per song rate in the neighborhood of a dime.

At that rate — $1.50 or so per album — consumers can afford to sample, experiment, accumulate, and splurge. Consumers would be encouraged to buy much more volume than they can through the legitimate services now, AND the artists, labels, and copyright owners are paid rather than being cut completely out of the loop as they are with the free file sharing services.

Is it a coincidence, then, that at around 10 cents per song the Russia-based service allofmp3.com is vastly popular around the world, ranked second behind only iTunes in the UK, for example? Rather than being the threat to world trade peace the U.S. Trade Representatives Office says it is, I would say it is THE model of what a legit music service should be with its reasonable pricing, clean design, vast catalog, and user-friendly software.

Heck yeah I’ll check out the new Dixie Chicks album for $1.87, American Idol Season 5 Encores for $1.12, or Red Hot Chili Peppers’ (double-CD) latest for $3.45. Would I at full U.S. price? No way – I have more important things to do with $50: I have a wife, house, and four kids.

And yet — and this is absolutely key — I can easily see myself spending $50 on music if I perceive it to be an excellent entertainment value, which I DO perceive to be the case at 30 or 40 albums for $50. So, do you want my $50 for or not? The iTunes method of 50 songs for $50 is working because most people are really looking for their favorite songs as opposed to complete albums when they buy music anyway, so $50 for 50 of your favorite songs doesn’t seem like such a bad deal. But $50 for 500 songs would be an excellent incentive to not only pick up my favorites songs, but to try out full albums, artists, and genres I wouldn’t go near at the higher rate.

“The United States is seriously concerned about the growth of Internet piracy on Russian web sites such as http://www.allofmp3.com … the world’s largest server-based pirate web site,” Neena Moorjani, chief spokeswoman for the Office of the United States Trade Representative, told the AP late last week.

“Russia’s legal framework for intellectual property rights protection must meet WTO requirements … In that context, we continue to call on Russia to shut down web sites that offer pirate music, software and films for downloading,” she said.

The site claims to be fully licensed in Russia. “MediaServices pays license fees for all materials downloaded from the site subject to the Law of the Russian Federation,” the site says, citing an agreement with the Russian Multimedia and Internet Society, which says it collects and distributes royalties for online use of copyrighted music.

The relatively lax Russia is already the second-biggest source of pirate music, film and software in the world after China according to anti-piracy groups, which claim Russian pirating cost U.S. companies nearly $1.8 billion last year.

But there is “pirating” and pirating. What allofmp3.com appears to do — publish prices, keep track of sales, report them to a royalty distribution agency, pay royalties — appears to be within current Russian copyright law and is qualitatively different from making unauthorized copies of a movie, album, or software and selling them in stores and on the street in direct violation of the even relatively lax copyright laws of Russia or China, etc.

The best use of the structure and reach of the Internet is to sell huge volume inexpensively to the benefit of producers and consumers alike – until consumers can do that legitimately, they will continue to find their own methods and entrepreneurs will continue to assist them.

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About Eric Olsen

  • http://w6daily.winn.com/ Phillip Winn

    It’s worth noting that downloading lossless versions of most albums — true CD quality — is around $5. Given the choice, people are apparently willing to pay less to get less in most cases, which is why the default setting appears to be 192kbps MP3.

  • Eric Olsen

    Phillip, where are you getting lossless versions for $5?

  • Makapao

    From Wikipedia

    AllofMp3 claims that it is completely legal in Russia because the music it distributes is licensed, and that whether or not it is legal in other countries depends on local copyright law. However, the legality of AllofMP3 within Russia continues to be debated.

    The following claim is made in the AllofMP3 FAQ: The availability over the Internet of the ALLOFMP3.com materials is authorized by the license # LS-3М-05-03 of the Russian Multimedia and Internet Society (ROMS) and license # 006/3M-05 of the Rightholders Federation for Collective Copyright Management of Works Used Interactively (FAIR). In accordance to the licenses’ terms MediaServices pays license fees for all materials downloaded from the site subject to the Law of the Russian Federation “On Copyright and Related Rights.”

    However, the referenced law of the Russian Federation clearly states that organizations such as ROMS need the permission of the rights holders to manage their rights, though ROMS believes that this is not the case.

    Paragraph 2 of Article 45 (Organizations for the Collective Administration of Economic Rights) of that law reads as follows, in pertinent part: The mandate for the collective administration of economic rights shall be entrusted either direct, by the owners of copyright or neighboring rights in written contracts, or under appropriate contracts with foreign organizations that administer equivalent rights.

    Paragraph 3 of the same article reads as follows, in pertinent part: By virtue of the mandate received under paragraph 2 of this Article, the organization for the collective administration of economic rights shall grant users licenses for the use of the relevant works and subject matter of neighboring rights by appropriate means.

    However ROMS interprets Paragraph 2 of Article 45 as follows: Licenses given by ROMS “are given on behalf of all owners of copyright and related rights, including those who have not given their authority to the organization.”

  • Jeremy

    Another feature of allofmp3.com that is singles it out is the ability to choose the format, bitrate and encoding of your music. This is so basic a feature, it’s hard to understand why others won’t do this. Oh wait, no its not: DRM.

    Eric, I think Phillip was talking about the option to download loseless .wav or .flac from allofmp3.com. The reason it costs $5 is because allofmp3 charges by the size of the file, which will obviously be larger for a loseless version of the same song.

    Phillip, even 192kbps is still higher quality then what most “riaa approved” music services offer as far as I know. 192kbps vbr is usually good for me, though if it is constant bitrate then I’d say 256kbps. In some situations though, it would be worth downloading loseless versions.

  • Eric Olsen

    thanks Makapao, I don’t doubt that Allofmp3 is not in compliance with most of the world’s copyright law, which requires the agreement of the copyright holders. My main point is that their model is about exactly what I would like to see legit services do.

    Ah Jeremy, I see what you and Phillip mean – thanks for clearing that up.

    And yes, DRM is a bain and decreases value.

  • http://www.breakingwindows.com/ Ken Edwards

    Eric, Allofmp3.com supports FLAC. This is a lossless audio format, and most FLAC full album CDs can be purchased at that site for about $5, as Phillip said.

    This site has seen legal issues before, Russian prosecutors tried to take them down a while ago, and they got off on a loophole in Russian law. The RIAA and US Government has had their eye on this site for some time, and have not been able to do anything about it.

    The other thing the site has going for it is giving the user the choice of bitrate, and file type.

    A lot of US media outlets, including WIRED magazine, have written about the legitimacy of the site. All accounts I have read seem to think they are working within the law.

    The site has been up for a couple years now, and I do not see it going away any time soon.

    But buying 192 kbps VBR files on allofmp3.com is the same (I think) bitrate you will get from iTunes, and a heck of a lot cheaper.

  • Eric Olsen

    I get it now Ken, thanks. I thin kthe bottom line re its copyright status is that IT is setting the rates rather than the copyright holders, AND it is making material available that hasn’t been authorized with digital sale at all – like the Beatles.

    I think the result is great, but the ability to set your price with no interence from teh copyright holders, and to make material available without permission pretty well flies in the face of international copyright law, (which should be a lot more flexible, I believe by the way).

  • http://www.breakingwindows.com/ Ken Edwards

    And I do agree, if I could buy song for even 50¢ on iTunes I would be using it more. 99¢ seems a little high, and a PDF does not make the purchase worth it. At least 99¢ is the standard, and not, say $1.99.

    Society will always find away around limitations, and that has nothing to do with whether those limitations are “right” or “wrong” or “legal” or “illegal.”

    This has been a great topic to keep an eye on, and this is the most heat allofmp3.com has had. But then, it is also the most free publicity the site has had too!

  • Dan H

    *************************FROM THE SITE****
    Copyright:
    The availability over the Internet of the ALLOFMP3.com materials is authorized by the license # LS-3М-05-03 of the Russian Multimedia and Internet Society (ROMS) and license # 006/3M-05 of the Rightholders Federation for Collective Copyright Management of Works Used Interactively (FAIR).
    **********************************************

    They can say what they like, but this is not licensed. It is like me saying that I’m authorised to sell music on my web site (btw, I’m not, and I don’t).

    ROMS (the authority quoted) was expelled from CISAC (the international, governing body for copyrights) over this very issue.

    Here is the text of the expulsion notice, taken from http://www.cisac.org:

    Quote: ROMS no longer a CISAC member

    The General Assembly of CISAC decided at its meeting in Seoul on October 2004 to expel Russian organization ROMS from CISAC membership on the grounds that it has been issuing licenses to copyright users without the authority to do so from all relevant copyright owners. CISAC concluded that such actions contravened internationally accepted collective administration principles, to the detriment of the creative community represented by CISAC. Despites repeated warning, ROMS’ decision not to respect the warnings sent by copyright societies around the world and CISAC and to continue to issue licenses without the authorization to do so has led to its expulsion. Moreover, any music user having a license agreement issued by ROMS authorizing certain uses of copyright works should be aware of the legal limitations of that license.

    Whether in the digital or physical world authors’ rights are a valid principle that exist and remain the main source of income for authors and composers. CISAC fosters a global network of 207 collective management societies in 109 countries, representing more than 2 million authors and composers. The cement of this community is the principle of reciprocal representation. These agreements entitle a society to administer foreign repertoires (license the repertoire, collect and distribute royalties) in the name of the society with which a reciprocal representation agreement have been signed. Therefore before being entitled to license any specific repertoire to any media, a copyright society must have the right to do so, that is to say must sign a reciprocal representation agreement with the foreign copyright society representing this repertoire. This is one of the fundamental principles of our confederation and copyright. 10/02/2005

    You might also be interested in the following commentary, on the copyright and legal issues from the International Intellectual Property Alliance (IIPA). They’re long reading, but reinforce the position that there is nothing legal about allofmp3.

    So in actuality, no this site is not legal, no more legal then downloading the files off limewire or bearshare

  • Steven

    Thank you Eric!

    I just would like to say I totally agree with you; I would be thrilled to pay $15 for 8 or so albums, whereas, I honestly feel cheated, ripped off, sometimes even guilty to pay the same for one CD. In all, I would spend far more money in the entertainment industry if the prices were more reasonable.

  • Ez

    and you have hit the nail on the head good post!

  • Billy

    mp3search.ru is good too. It contains a lot more rare items that you can’t find even on iTunes (especially if you like metal), and is in the same boat.

  • Eric Olsen

    thanks for the info Dan and Billy, and for the kind words Steven and EZ!

  • Jimmy H

    Interesting, I just finished writing a paper (assignment) for one of my uni subjects on current copyright laws in the states and over here (australia), where by the way, we Aussies pay more through I-Tunes than you in the states do (I have an idea we pay $AU 1.79-$2 per song? im not totally sure, there was quite an uproar recently over it)

    OK, here’s a personal example. I’m a big Tool fan, and as some of you probably know recently they brought out their new album. I downloaded it before the CD was released here, listened to it a few times, and LOVED it…so then went and bought the CD. What I love about digital music is that it allows you to preview music, “experiment” before you spend your well earned cash.

    I completely agree with your idea about preferring bulk buying over paying roughly the same price for albums. What I’d also like to bring into focus is that, normally, we aren’t supporting the artist, we’re more supporting the labels. Artists usually receive only around 3-5% of record sales. In short, the average modern “breaking through” rock band earns more off ticket sales for gigs and merchandise than from CD sales through retailers. So I think for now, I’m going to keep supporting my local acts by going to gigs, buying merch…but for international acts? I’ll keep bittorrenting thank you very much.

    (side note: Makapao, no offence mate, but don’t rely on wikipedia, its definetly not a good resource to be structuring an argument on)

    Well written, great insight. Kudos!

  • Eric Olsen

    thanks Jimmy, very interesting info and glad my perspective makes sense to you!

  • Wiggim

    Eric, you look old enough to remember when video cassettes first came out. Do you remember how much they were? $79-$99 How many did the movie industry sell? About zip. You can now get new DVD releases for $17 or less and they sell how many? DVD sales frequently exceed box office receipts. When will the music industry get it? On Wall Street the saying goes “The Bears make money and the Bulls make money, but the Pigs go broke.” Good article.

  • Thomas

    What no-one anywhere is thinking through is the value of music to any one individual, when the total volume of music they own increases.

    It seems obvious to me that labels are behaving greedily in their pricing monopoly, where they have literally orchestrated a ridiculous price point for digital downloads, with virtually no distribution costs.

    So I own 400+ CD’s, legally. If I listen to one CD a day, I wont get through them in a year. The value derived per new CD, and it’s effect on my whole collection, thus changes.

    So, it’s ridiculous to charge such high amounts for digital downloads because it’s not aligned with the value given to users.

    I think allofmp3’s price points are ideal, to make it a smart idea to buy all the music. I’d guess in total volumes, the artists would make more if all music was priced at this level.

  • russel

    Why do Record Companies sell their cds cheaper in Far East Countries ? why do they charge so much for them here in Europe an USA ? is this not a Rip Off? Is it any wonder people download music Illegally, Maybe if the record companies,AND artists weren’t so greedy then we would all have a fairer system of listening AND PAYING for music Legally. As for me i’m using http://www.lavamus.com guys are great! i have no problems with my credit card also they are accepting paypal

  • russel

    is it illegal to buy a cds in a russian online store?

  • http://www.ac.by/Artist/1/Glenn_Hughes/mp3/download Coma

    Glenn Hughes
    Get your music

  • http://www.lavamus.com/ Lava mp3

    To buy music in Russia very favourably and absolutely legally. Simply the USA do not want, that Americans spent money in Russia. In my opinion is very silly. What for to spend 1 dollar for a song when it can be bought in 10 times more cheaply.
    I use site Lavamus.com. Very comprehensible prices and a wide range of rare music.

  • dan

    my music is being ripped off and sold by lavamus.com.

    I recently posted the below comment to allofmp3.com

    FUCK THE CORRUPT LAW – is it RIGHT?

    as one of the minority of americans who showed up in seattle to protest the WTO years ago (for such outrages as their role in legitimizing the murder by malnutrition of guatamalan babies by gerber) i’m not someone who by nature celebrates the actions of the WTO. however, as an indepenent musician who still hopes to get fair compensation for his dedication, discipline, investment, talent, and above all WORK – I applaud the WTO’s role in blocking americans from downloading mp3s from your site.
    You say:
    “A legitimate copyright owner may request to have their works removed from a Russian Licensing Society, or alternatively, they may request their fair share of the collections. To do so, the owners must simply prove they own the copyrights to such artistic works.”
    So, my music, produced independently on a small budget not involving any record companies, is “for sale” at another cheap russian download site (not yet on allofmp3). It appeared there shortly after we made it legitamately available through CDbaby and itunes and some other companies – the russian company is selling it at less than half the price, is one of google’s top hits for our band name, and does not reward us at all.
    All I need to do is “prove I own the copyrights to such artistic works” you say?? i checked the link to the ROMS (russian collection society) website, and, guess what? I don’t speak russian, so how do they possibly expect me to “prove” anything? they have a brief english page, but even just to contact them, you have to read russian to understand which fields are which in the contact form.
    Actually, i don’t mind if russians, who live on less money, pay less for rent, less for food, etc, can download my music cheaply if i were to actually get a few cents per download. but i don’t, and there is no structure in place for me to make it happen.
    as for you americans who are so excited about getting cheap music here, ask yourselves how you would feel if you had to charge russian prices for your business, and pay the rent here. is that fair? now ask yourselves how it would be if someone else was selling YOUR WORK at russian prices to americans, telling them you get 15 percent, and then blocking your access to this piddling amount of money to anyone who doesn’t speak russian. does that seem fair?
    there are collection societies in just about every country, and they all have agreements to pay directly to the other societies in artists’ home countries. (BMI is mine, for instance) The socities of these countries have no problem “dealing with” the other socities, so why should russia’s ROMS decide that foreign artists need to register (in russian) with them directly? it’s irresponsible at best, more like a weak cover for theft.

    some people feel OK about “owning” and enjoying music and not compensating the people who invested time and money and their hearts into making it. in fact, that’s probaly most of us.

    but a lot of us, if we really like something, even if we “stole” it to test it out, want to support the people who worked to make it and bring it to us. So we feel better about paying a little money for some music.

    Well, despite all the legal jargon these russian sites are spewing, we all need to understand they are NOT compensating the people whose efforts went to making the music we like.

    so you just have to ask yourselves: IS THIS RIGHT?
    don’t ask, is it legal, ask, is it right?

    maybe you’re thinking, “i don’t give a fuck if madonna or snoop dogg or sony corporation loses sales, they’re so fucking rich anyway” – and i’ll tell you what, neither do i, but they aren’t the only ones getting fucked, and for smaller-time indy musicians who dedicate their lives and money to making music, for these sites to rip us off, you have to ask yourselves about the ethical character of these assholes, no matter how much legal mumbo-jumbo they speak, or how many bitrate options they have.

    in Nazi germany, it was ‘legal’ to do a lot of nasty things, but that sure didn’t make them right.

    if you want stolen music, steal it yourself with P2P. if you want to buy music and reward an artist, don’t buy it from russia.