UK group to sue AllofMP3.com

BPI, which represents British record labels, says it will pursue copyright claims against Russian download site of questionable legal status.

The furor over Russian download site AllofMP3.com site heightened today, as the trade group that represents the British record labels said it will pursue copyright claims against the service in court.

"AllofMP3.com is illegal under UK law, and it is illegal to download from it," said Roz Groome, general counsel for BPI, said in a statement. "We are going to sue AllofMP3.com in the UK courts--we are going to seek a judgment not against the users of the site, but against the site itself."

Groome, BPI chairman Peter Jamieson and Mark Richardson, managing director of the Independiente label, appeared today before the British select committee for Culture, Media, & Sport inquiry into new media and the creative industries.

The move caps off a stretch that saw the increasingly popular download site go offline for a short time in mid-May for "maintenance" and receive a surge in traffic once it came back. Increased attention and hints at legal action from the music industry have followed.

AllofMP3.com has existed in a quasi-legal state for several years. It charges users for downloads, but sells those downloads for as little as $1 for a full album. The site does not charge by song but by volume, charging users 2 cents per megabyte. As a result, higher-fidelity songs cost more than lo-fi tracks.

AllofMP3.com claims to compensate copyright holders for music sold on its site, but the labels dispute those claims.

"AllofMP3.com is not a legal service either in Russia or anywhere else," global music industry trade group IFPI said in a statement last week. "It is distributing music without any permission from the artists or copyright holders. Unlike all the legitimate sites, it does not pay artists or copyright holders, so it is effectively stealing from those who create music. Like most things that appear to be too good to be true, AllofMP3.com is not what it seems."

IFPI said that illegal Russian download sites cost the music industry $1.8 billion in 2005.

The site and its owner, MediaServices, are currently being investigated by Russian authorities, who are facing increased attention from the US as Russia seeks admittance to the World Trade Organization.

"The United States is seriously concerned about the growth of Internet piracy on Russian Web sites such as 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 Associated Press last month. "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."

As the controversy has picked up in recent weeks, AllofMP3.com had remained silent but issued a statement this week.

"The site AllofMP3.com belongs to a Russian company and for six years it has operated within the country, in full compliance with all Russian laws," the site said in the statement. "Throughout this period, the various government offices have scrutinized [the] site's legality and have not found any breach of the law. So far there has been no decision by any Russian court contesting the site's legality."

AllofMP3.com bases its defense on the fact that it does not operate or advertise its site outside of Russia and that it does indeed transmit royalties to the Russian organizations responsible for managing royalties, the Russian Multimedia and Internet Society and the Rightholders Federation for Collective Copyright Management of Works Used Interactively. The music industry has said that those licenses would not apply to users outside of Russia.

With its far-cheaper-than-iTunes prices and no DRM, AllofMP3.com has become the second most popular download site in the UK in recent months, second to only iTunes. The site's catalog includes the latest releases, including Gnarls Barkley's St. Elsewhere, Tool's 10,000 Days, and the Dixie Chicks' Taking the Long Way.