How Russian music licensing works
Brits are at it again with the description of Russian download service AllOfMP3. Once again, the journalist makes a mistake of calling service illegal (comes from Russia, right, so what can be legal about that?) without doing a bit of research on what’s actually happening. The term is compulsory licensing, and Russia borrowed it from good ole United States.
Here’s my letter to the author for those interested in deeper inner workings of music licensing in Russia:
In your article The Russians are coming in Guardian Unlimited you mentioned the music on the label’s site is not licensed by labels and a loophole in the legislation allows the music service to exist by selling the digital music over the Internet.
In fact, though, the music is licensed from the labels, but under the different scheme than you’re used to in the US or UK. Russia employs the concept of compulsory copyrights, where the copyrights belong to the artist or music label, but there’s a requirement that they license it to anyone who asks for it. I refer you to Lawrence Lessig’s book The Future of Ideas for description of such concept, which originated in the United States and was applied first to the sheet music.
It is a provision, not a loophole, in Russian legislature. It allows anyone to enter a music market on non-preferential basis with one condition - royalties must be paid. There’s a minimal royalty stipulated in legislature, you can negotiate above it (although, why would you?) or below it (if you can get a label to agree to smaller payout). Russian Society for Multimedia and Digital Networks is the agency responsible for collecting royalty fees and distributing them to the labels and private musicians.