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http://www.dailytech.com/Article.aspx?newsid=5501


AllofMP3.com continues to feel the squeeze

One week after the Recording Industry Association of America filed a $1.65 trillion dollar lawsuit against Mediaservices -- AllofMP3.com's parent company -- an official blog from the company announced the following:

An attempt by the major record labels to use a U.S. court to as part of its campaign against AllofMP3.com is imprudent.

AllofMP3 understands that several US record label companies filed a lawsuit against Mediaservices in New York. This suit is unjustified as AllofMP3.com does not operate in New York. Certainly the labels are free to file any suit they wish, despite knowing full well that AllofMP3.com operates legally in Russia.

In the mean time, AllofMP3.com plans to continue to operate legally and comply with all Russian laws.

The lawsuit claims that royalties from music sold on the AllofMP3.com site have never been paid to American labels. The suit specifically claims "the 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 Mediaservices counsel, Mediaservices and AllofMP3.com operate solely as Russian enterprises and New York laws do not apply to the company.

AllofMP3.com has been a hot topic for politicians as well. The site was recently singled out as a specific infraction preventing Russia from entering the World Trade Organization. Soon after, The Bilateral Negotiations on Russia's Accession to the World Trade Organization outlined that pirate music websites within Russia will be taken down by June 2007 -- specifically mentioning AllofMP3.com.

Mediaservices counsel, which operates in the U.S., contended the company adheres to Russian laws and pays royalties to the Russian Organization for Multimedia and Digital Systems, the Russian equivalent of the RIAA. John Kheit, an intellectual property attorney representing Mediaservices, added that no U.S. labels have ever attempted to claim royalties even though said royalties are earmarked and balanced if labels come forward and request them.

Even if such royalties are maintained, the fact that no U.S. company has come forward to claim royalties seems intuitive: it would give AllofMP3 justification for operating in the country. AllofMP3 also has a profit-sharing model with artists but claims that U.S. artists attempting to claim such profits have also had a difficult time producing documentation proving the rightful ownership of the music.

Earlier this year both Visa and Mastercard pulled credit card portals for the website. Users now must purchase credits through a proxy such as Xrost and then purchase music using the credits.

The Mediaservices website was not functioning at the time of this publication.


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