MP3Search interview

Interview with Sergei Arsentiev, director of MP3Search.ru (now GoMusic.ru)

November 18, 2004

MP3Search (now known as GoMusic.ru) is the second biggest Russian Legal Music Service. This service is even more controversial than their competitor Allofmp3 because MP3Search is able to add albums to their catalogue even before the official release date. Eminem's album Encore was available about a week before the official release.

Hans Handgraaf of Museekster.com sat down with Sergei Arsentiev, director of MP3Search.ru to find out more about MP3Search and the situation on copyrights in Russia.

Hans: The way copyrights work in Russia is very different form the situation in Europe and the U.S. This causes endless discussions on the legality of your service. Can you explain in brief how a service like MP3Search is able to offer all music in accordance with the Russian legislation?

Sergei: I would like to notice that the situation with copyrights in Russia has a strong resemblance to the legislation of Spain for example. According to the Russian legislation, organizations like RAO and ROMS are possible. Such organizations have the right to collect the copyright fees without any preliminary agreements with copyright holders.

Hans: You seem to be able to release albums before the official release date. Does this imply that you obtain your music files from both P2P and the original CDs? 

Sergei: The publishers themselves often put albums to the market before the official date of release. We receive many new releases from traders and from insiders. Unfortunately we cannot control the publication of an album depending on the declared date of official release as we take date of official release from public sources, and such information is not quite reliable. At present we are not capable to work with each label individually because it is too laborious yet.

Hans: So the license from ROMS allows you to distribute music now matter how the files were obtained? Do you have to pay royalties for the files obtained by P2P and the unofficial albums (bootlegs) in your catalogue just as for the rest of the music you offer?

Sergei: We pay license royalties for all objects of copyrights without exception, i.e. for all our files: both requiring payment and free.

Hans:  Using files from different sources may have consequences for the quality. P2Pfiles are known to have poor quality in some cases. Do you mantain some kind of minimal quality for the songs you release? 

Sergei: We try to control the quality of our files as far as possible. Some rare files are of such quality as we managed to find. Popular music are of high quality (from 192 kbps bitrate). Unfortunately it is impossible to listen to all the Gigabytes of music we add daily, therefore we are guided mostly by responses of our users and correct the files whose quality our users consider insufficient.

Hans: There have been a few publications on changes in the copyright laws in Russia. What is the current situation and will these changes have an effect on you service in the near future?

Sergei: An amended legislation will come into force beginning from the 1st of September 2006. It will be obligatory for an organization on collective management of copyrights (RAO, ROMS and others) to conclude agreements with all copyright holders whose works they want to give in the Internet. We have time yet to decide how to win in this situation.

Hans: I have read a publication regarding a disagreement between ROMS and RAO about the licenses. According this article, RAO is planning to license services like MP3Search directly. In their latest press release, ROMS however states that they are working on independent distribution of the copyright fees. What are the latest developments in this matter?

Sergei: Yes, as far as I know RAO and ROMS have totally quarreled. But there is no fundamental difference between these organizations. Both of them are authorized to collect the copyright fees. It is simply a struggle for the control of monetary streams. It is absolutely unimportant for us to what from these two organizations we pay copyright royalties. Unfortunately the copyright holders receive minimum anyway.

Hans: What amounts or percentages should we think of when are talking about the royalties you pay? Do you pay royalties per song or is there some other kind of arrangement with ROMS?

Sergei: We pay 10 % of our full income (not of the net income only). ROMS's tariffs will increase beginning from the 1st of January 2005. We do not know yet how far they will increase.

Hans: Recently you have changed the pricing from a penny per Mb to $ .10 per song. What was the reason for this change?

Sergei: Many Russian and foreign copyright holders were displeased with such low prices ($0.03 - $0.05 USD) per song, and the price of $0.10 USD satisfies them. Also this change is to make calculations with our clients much more clear and transparent. In fact, bitrate and size of a file are unimportant both to our clients and copyright holders. That is why it is not reasonable to take money for megabytes. Besides that, there are a lot of beginners in the Internet, and they do not understand units of quantity of the information at all.

Hans: Payment by PayPal has been down for quite a while now. Can you tell what causes this? Is there any chance this feature will return in the near future?

Sergei: Unfortunately PayPal company does not recognize, or is afraid to recognize, legality of our activity in Russia. Our lawyers have all necessary documents and have communicated with PayPal company many times but in vain. Moreover PayPal company withholds our users' payments for summer 2004. However we decided not to cancel these payments and serve our users at our own expense hoping that PayPal company will pay us the money nevertheless. Some Russian websites continue to accept PayPal through "grey" schemes. We prefer to work "white" and continue dialogue with PayPal company as we still have not received from them the concrete reason of refusal in service.

Hans: Odd that a bank can decide on its own whether or not a service is legal. Even more strange, because I have been told that importing music to the U.S. for private use is not illegal when the music is bought from a company or person who is licensed to sell this material. It looks like the RIAA and IFPI have something to do with this boycott. Has your company ever been directly contacted by representatives of these organizations? If so, how did you react?

Sergei: Yes, these companies have great influence in the USA and Europe. Probably this fact accounts for our problems including the problems with PayPal company. 
Representatives of IFPI keep sending us angry letters and faxes. We answer and suggest that we should find a solution of the question together. But no subsequent dialogue has ever followed. They think they can prohibit us from selling one or another album but according to the Russian Federation Law we have the right to sell music in the Internet and the law makes no provision for any territorial restriction. Especially as the concept "territory" can hardly be used regarding the Internet.

I would like also to call your attention to the fact that we have applied repeatedly to the record labels (whose music is sold by such websites as iTunes, Rhapsody, MSN Music) for consideration of possibility of our business in the USA according to THEIR law. But apparently they do not want to admit one more competitor to the on-line music market in the USA. It is very unpleasant, especially for American citizens as these websites take too high price per song and cannot offer such big variety of files as we can and forbid their customers to use the purchased files free because they protect the files with DRM technology.

Unfortunately our company do not have enough means to arrange a permanent representation in the USA, staff up and engage solicitors and lawyers. And it is quite inconvenient to apply to the American antimonopoly committee from Russia.

Hans: What are your plans for the near future? 

Sergei: We have a lot of unique ideas and promising projects but unfortunately have not enough time. However we hope to present some of them in the near future.  

Hans: Thanks very much Sergei for taking time to answer my questions. I am sure your clear answers will be appreciated by many.