AllofMP3 Doomed with US Russia WTO Pact?

By Richard Menta 11/11/06

Friday the Americans and the Russians came to terms over their trade differences, leading the US to OK Russian entry into the World Trade organization. The pact covers several grievances, one of them focused on Russia's poor track record on intellectual property rights. The poster boy for this issue became Russian music service, which was elevated to this dubious position thanks to a British report. The report found that AllofMP3 was the number two service in the UK, behind only Apple, with an impressive 15% of the regional market. Indeed, AllofMP3's low prices for music tracks combined with their availability in multiple formats without interoperability-killing DRM arguably made it the second most popular service worldwide, an achievment supported by Alexa figures.

The question now is will the Russiand take steps to close the service down immediately or wait until its formal entry into the WTO, still threatened by former soviet satellites Moldova and Georgia.

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But then maybe the point is moot? The other month the entertainment industry successfully convinced the major credit card companies including Visa and Mastercard to cut off AllofMP3. With its main source of international money exchange removed, AllofMP3 was forced to shift its business from a pay-per-track scheme to an advertised-based model. Whether the company can survive on the new model is debateable.

But if it is successful, then pressure will most likely be brought on Russia to honor its copyright committments and take action against AllofMP3. That doesn't necessarily mean closing the service as Russia could impose a government licensing commission to serve as intermediary between the worldwide record industry and the Russian digital record market. But then again the well is tainted for a record industry who may take an "anybody BUT AllofMP3" stance.

For its part AllofMP3 says it adheres exactly to existing Russian law, paying royalties to services including the Russian Organization for Multimedia and Digital Systems (ROMS). The big question that is never anwered one way or the other is simply this: is ROMS legit? No one, including the press or the Russian government, has answered this question and I'll be damned if I have been able to find out.

I still want to know, but then in the world of international politics it probably does not matter anymore. Once AllofMP3 became a WTO barganing chip its days were numbered.

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iPod Killers for Christmas 2006


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