Robert Switzer

The Russian music store tells US citizens that purchasing music from AllofMP3.com is legal – probably.

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Heads up, media companies. Allofmp3.com is the dog that hunts. Pay attention — this is the business model that works: Low-cost downloads, large selection, no drm, multiple bit-rates and formats. Pre-paid user accounts create a very profitable float. Ask the banks and phone companies about the profitability of pre-paid calling and credit cards.

Russian intellectual property law uses a broadcast paradigm to deal with internet downloads, much like the ASCAP/BMI model in the United States. A blanket license is purchased, and the licensed business remits a small amount per broadcast or download instance to a central rights-management organization that then distributes these funds to the artist or their representative on demand, in much the same way that ASCAP/BMI distributes payments for radio broadcast royalties in the US.

Some high-profile figures in pop music have come out against allofmp3.com, calling it outright piracy. I have three questions for these people. The first question is, “How much airplay are you getting now?” the second question is, “Wouldn’t more exposure be a *good* thing?”. And the third question is, “If you haven’t been paid by the Russian rights management organization, has your record company or management *approached* this rights management organization and asked for an accounting?”

Large media companies are refusing to acknowledge the legitimacy of the Russian approach to downloadable content. So none of the large media companies have even approached the Russian rights-management organization to demand payment on behalf of the artists they distribute. To do so would be to validate the legitimacy of the arrangement.

So the artists lose. Not because the Russian rights management organization has refused to pay, but because the media companies that represent these artists prefer not to demand payment, as doing so would legitimize the download-as-broadcast paradigm versus the download as physical product model that they prefer.

Meanwhile, the RIAA and the MPAA continue to conduct disinformation campaigns suggesting that allofmp3.com is illegal and that it will be shut down ’sometime real soon’ while allofmp3.com continues to do a land office business giving people what they want and getting paid to do so.

I suggest that anyone reading this go to allofmp3.com, read the faq there, and then make their own decision about the legality of the service on offer and act accordingly. I have.

I further suggest to artists that fear piracy that they should fear obscurity instead. Back in the day, a musician performed to promote the sale of recordings. Today a musician makes recordings to promote the sale of performances and merchandise, and the name of this game is high visibility. Downloads and other viral distribution channels build visibility, supporting the sales of concert tickets and merchandise.

Piracy can be defeated by creating a distribution structure that beats piracy hands-down on quality, consistency, and ease-of-use. And then pricing this service significantly below the opportunity cost of piracy. Allofmp3.com is the closest thing I’ve seen so far to a service that could eradicate piracy by beating it in the marketplace rather than the courtroom.