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Digital Cold War Over AllofMP3.com

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Quite a week for AllofMP3.com. The Russian music site has been singled out by the US trade representative Susan Schwab as a major obstacle to Russia’s membership of the World Trade Association. Schwab said Russia must shut the site down, claiming it is one of the world’s largest sources of pirated music: “I have a hard time imagining Russia being a member of the WTO with a web site like that operating.”
Needless to say, since the story broke on Wednesday the site has been flooded with new registrations. In six years the site has built up 5.5 million subscribers and is signing 5,000 new users every day. General director of parent company Mediaservcies, Vadim Mamotin, said they had set up the site for themselves and never expected the site to be so popular. And it’s popular because it charges 15-30 cents per song, a percentage of which goes to the Russian Organization for Multimedia and Digital Systems which oversees property rights. ROMS forwards money to copyright holders, but Western companies don’t recognise the body and a group including EMI, Warner and Universal are planning to sue Mamotin and fellow director Denis Kvasov. According to Russian Newsweek, the site has annual revenues of $30 million.
ROMS chief Oleg Nezus confirms the ‘boycott’ of the money offered by his organisation and then admits that it’s “not a lot”. But he also said that Western pricing is just too high for the Russian market: “Who in Russian would pay a dollar for a song?” Mamotin said Western companies are ignoring a good business model and said P2P networks are costing them far more. He said the site doesn’t break the law because it is registered with ROMS, and said that several Western companies have made deal to sell cheap music in China on sites like top100.cn.
Arkady Dvorkovich, economic advisor at the Kremlin, said music piracy would remain if prices remain high: “You need to find a compromise between the interests of Western and [Russian] consumers.” Until, of course ad-funded services are introduced.
Related: UK Users Of Russian MP3 Site Told It’s Illegal

This article originally appeared in MediaGuardian.