AllofMP3 Outsources Marketing to U.S. Government
by Michael Arrington on October 7, 2006

AllofMP3 is a Russian web service that sells digital music at very low prices without any copy protection. The service, which would clearly be illegal in the U.S. and many other countries, continues to operate apparently legally under Russian law. Our previous coverage of AllofMP3 is here.

AllofMP3 has become the center of attention in major trade negotiations between the U.S. and Russia, and appears to be the only thing stopping Russia’s entry into the World Trade Organization. Earlier this week, reports Russian newspaper Kommersant, U.S. Trade Representative Susan Schwab demanded that Russia shut down the service.

AllofMP3 seems to take the demands in stride, reportedly saying that all of the attention from the U.S. government is actually helping to spread the word about their service and increase sales. Kommersant estimates AllofMP3 revenues at $25-$30 million annually.

An AFP story says that the Russian Parliament has given preliminary approval to a new law that could shut AllofMP3 down.

Whatever the outcome to AllofMP3, the service has shown that consumers are willing to pay for high quality DRM-free music. In a time when nearly every new album (and tv show, and movie) is available for download via bittorent sites, we may see an increasing number of big labels try selling music without copy restrictions. Personally, I’m willing to pay for guaranteed quality and download speeds (neither are available via bittorent) if there is no DRM on music (allowing me to burn CDs, port the music to my iPod, etc.). And I’d much rather pay for DRM-free music than get copy protected music for free.

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Comments

Evening Michael, hope you are well.

Interesting that the revenue estimate is that high - I never expected a number that large. Well, I haven’t even thought about it to be honest, but interesting to know never-the-less.

Imagine if Apple/MS/Real/Napster/Etc. did what AOMP3 do - legally too - they would make an absolute fortune. I know AOMP3 also lets you encode in different formats (e.g. ogg vorbis) which is also an extremely attractive feature.

Thanks,
Matt

 

I think AP actually got the copyright ascpet of the story wrong. New laws actually did come into effect last month - now it’s up to the courts to decide whether Allofmp3 abides by them or not …

For an in-depth analysis see:

http://www.p2p-blog.com/item-142.html

 

The absence of DRM is important and I, too, would buy online music to that didn’t have DRM. But I have to wonder how much of their success is due to that and how much is due to the very low prices. The latter factor can’t be duplicated here - AOM3 doesn’t pay artists, nor do they pay copyright holders any licensing fee so the can be cheap. A legit service here could not eliminate those costs.

 

So where is eMusic.com based that it can also offer DRM free music downloads?

 

Helen - emusic has the right to sell the songs it does in mp3 format. That’s why you find a lot of independent music and not major label.

 

emusic is US based I think, with subsidiaries in the UK and Europe but you won’t find major label music there. AOM3 has the new Killers CD… for $1.91. Think the band is getting royalties? Or the label is getting a license fee?

DRM-free can be done anywhere legally as long as the copyright holder licenses it that way. To date, the labels prefer to sue their customers vs offering DRM free music. Silly labels…

 

Besides price, AOMP3 offers a unique service and business model that all US companies could learn from. Base price is based on megabytes , ie, the amount of data you down-load. It’s very reasonable. As some have pointed out, you can purchase an entire CD for less than $3–and that’s DRM-free! Not only do they have a deep catalog, you can choose your bit rate and format (eg ogg, mp3), both of which up the base price. It’s as near to perfect as I can imagine. Can’t wait till the rest of the world realizes that the perfect model already exists.

 

Just wanted to point out the misspelling:

“AllofMP3 has become the center of attentionion in major trade”

:D

 

“neither are available via bittorrent”

I beg to differ. If you’re a member of a private bittorrent tracker like Oink’s Pink Palace, you get the added advantage of both. The bare minimum of encoding is 192kbps, with many albums available in lossless codecs. Then you have to keep a certain ratio–around 1:1–to keep your membership, thus ensuring even the most obscure torrents stay seeded

 

I am very happy that j block comments on a unique service and business model.

I think that should become the focus of the discussion and not the “very low prices”.

The point here is that if you download music from AOMP3 in lossless format (e.g. FLAC), then the price becomes roughly comparable with that of commercial CD.

Music becomes cheaper as a user decreases the encoding bitrate and hence the size of the download and the quality of the track.

Now, everybody has been conditioned that a track should cost around $1 and everybody forgets that they are not getting exactly the same quality as with CD.

From end user value proposition, AllOfMP3 is probably indeed unique:

1) you get full track pre-listen
2) you choose codec
3) you shoose bitrate
4) you get clean unlocked track that could be listened to anywhere

I think business is about the value proposition, not about limiting user choices. Don’t you think that RIIA and Co are actually working towards locking everybody in a specific and very strict model?

Disclaimer: I am not discussing legal aspects here, though they may not be straightforward. The site jurisdiction is in Russia and (in my limited understanding), the business is registered there, so it’s between Russian and appropriate country copyright authority (or labels) to settle issues. I do believe that artists should be rewarded for their work.

 

There are a lot of reasons why DRM-free services should pick up steam in coming years. The major one is that as people buy phones that are mp3-compatible they’ll want to move their digital music over to them. When they find they can’t do that with their iTunes tracks many of them may quickly sour on the iTunes experience.

The Zune launch might also increase demand for DRM-free content in a strange sort of way. Since the Zune isn’t going to be PlaysForSure-compatible there is going to be a lot of confusion on the part of consumers who can’t figure out why a Windows Media file won’t play on a Microsoft device. My guess is that this might lead to a good number of them eschewing DRM content altogether and seeking DRM-free alternatives.

It’s an uphill battle to put a DRM-free service out there (we’ve felt it with our DRM-free audiobook service and I’m sure eMusic and others have had a tough road as well) but I truly believe it’s the future. Let’s just hope that many others start buying into that.

 

I’ve bought my share of DRM-ed music, but I don’t imagine it’ll last past the next two major computer crashes. It’s too hard to backup, and I can’t do what I want with it!

 

Well if I ran all of mp3, I would simply move my services to a more receptive country. Say North Korea, well… maybe not; but I’m sure there is one less pressurable.

I have a feeling that DRM will kill the music industry much faster than piracy. At least with piracy, someone is listening to music, with DRM, they get nobody’s attention at all.

 

just read it.. i c…

nice one..

regards
shashi
http://www.indianinside.info

 

>and appears to be the only thing stopping Russia’s entry into the World Trade Organization.

well not the _only_ thing if the Republic of Georgia has any say

http://en.wikipedia.org/wiki/2.....ontroversy

 

Globalization is a b*tch huh? Seems like we only like it when the other country gets the short end of the stick, which isn’t happening as much anymore (just look at China’s trade surplus).

 

It is amazing how one company can circumvent entry of entire country into the global trade relations.

So much for music industry, making money hand over fist and no concessions towards confining to the consumer needs but rather stick with greed and nothing else. The business model of allofmp3 is great, in reference to charging consumers per megabyte of downloaded content.

When I buy CD i tend to listed to it in different players, not one specific player, and that is what DRM’d music offers to me. I pay for the product and I owned it, therefore I should be able to listed and experience it anywhere and anyhow I desire.

I’m highly skeptical of the fact that allofmp3 is the reason that Russia cannot enter into WTO, other issues are at stake. It is more like the laws of the land are at stake and AllofMP3 is a escape goat in this case. I’m not saying that they should not pay fees associated with their business practices, but I’m just saying that there are many unpublicized issues at stake with Russia’s entry into WTO, not just AllofMP3 business’ existence as a barrier of entry. It sound so silly that major publications out to be embarrassed for even vesting their time writing about such issues, don’t they have more importance matters to write about.

 

This was bound to happen. Even though the Russian government might have passed a law to close the service, I am damn well sure that AOMP3 has a few tricks up its sleeve. And the way things work in Russia, it will take long time before we will see the closure of AOMP3

 

I’ve bought more music in the few months I’ve had an account with allofMP3 than in the past five or ten years.

I’ve also written about the artisits I’ve bought and linked to their actual websites.

Surely this is the sort of thing music companies want to happen, so why do they make it so difficult to listen, and buy, their music?

 

“Surely this is the sort of thing music companies want to happen, so why do they make it so difficult to listen, and buy, their music?”

yeah im sure music companies WANT you to not pay them or the artists any money. Get real, you might as well download the stuff for free using some p2p program rather than pay allofmp3….its the exact same thing as far as the music companies are concerned.

 

AllofMP3.com rocks. If tracks were 99 cents each, many people would still use the service because of the all the features. Wait ’till “All of Video” comes out.

Oh yeah, most people cannot hear the diff between 128 and lossless. The world is much bigger than nerds who have hearing like dogs.

 

All I can say is that I am a happy AllofMp3.com customer. I have paid and downloaded about 10 albums and I am very satisfied of their service. I prefer to pay for easy-to-download high quality audio files than scanning P2P free networks (a time waste). Also, I would never buy a DRM crippled file. The US big music companies can keep them to themselves as far as I am concerned. In my opinion, the music industry needs to focus on attractive physical (made of atoms) products (like beautiful CDs with booklets), and international laws should allow free circulation of digital files as a way to democratize culture.

 

Of course you are… you got 10 albums for less than the price of 2…

Look, lets just drop the pretense that we’re all concerned with IP and artist’s rights, OK? What the success of AllofMP3 shows is that people want music for as close to free as possible and really could care less if the artist gets a dime.

 

I am happy to note that you are willing to pay for DRM-free, high-quality music Michael. That makes it one man less from countless download soldiers who are more than content with getting music without having to pay for it.

I agree that DRM is not a good way to restrict music sharing but I do think that it is not possible for musicians to excel (as opposed to get by) without making it hard for copyright violators and stop their “get-it-for-free, click my ads and make me rich” scheme.

 

“Look, lets just drop the pretense that we’re all concerned with IP and artist’s rights, OK? What the success of AllofMP3 shows is that people want music for as close to free as possible and really could care less if the artist gets a dime.”

People make it sound like if we are buying our music from companies like iTunes and even the CD’s themselves that the artists are seeing a ton of money. We need to remember that most of the money is going to the record company and that the artist isn’t gaining a crapload of money from the sale of a single disk.

 

Just to clarify, we can’t participate in this service if we live in the U.S.?

 
 

Hello guys! I’m from Russia. I think that AllofMP3 is a sin and a shame! I’m surprised that so many pirate mp3 fans in America :( You should stop support our thiefs (or maybe you are thinking innocent until proven guilty???)

p.s. sorry for bad English, I have never been in USA

 

Vladmir

In many ways I think that DRM is a sin and shame: Music and the Arts have a special place in society: they for instance they are one of the few industries that can be promoted on TV, in Magazines, Newspapers etc with out restriction (at least in the UK and Europe): they are not just industries like the Shareholders or Accountants believe.

I don’t support stealing from Bands or Artists, but I don’t like the restrictions placed on me by DRM: I pay for the music and I want (demand) the right to transfer music to my laptop, my PDA, my car and to lend music to a friend (if I do that I’m effectively acting as sales person) without feeling like I am a criminal.

CRM is much too restrictive: I have always wondered why I can’t exchange damaged CD albums/DVDs , if they get damaged, for the cost of the media after all I have bought the licence already.

AofM3 is part of a redressing of the market forces between consumer and the providers: I hope that it will (in its possibly short life) help redress a balance that has swung too far against the consumer

 

“Free” music is anything but if you count in the time spent searching, downloading, restarting downloads, cleaning tags, cleaning filenames. Cheap and easy can beat free and difficult. j Block and Sergey point out how well the AllOfMp3 model works. What we ought to have is a legal western version of the same thing.

As for the price and royalty payments, I think music just isn’t worth what it used to be worth. An album is only worth $2-3 these days not $8, $12, $20 as it used to be. Can artists be paid and middlemen take their cut at those prices? Well I rather think they can. Just not the vast sums they’ve been taking in the past.

And as for DRM? DRM Is Killing Music. Just Say No To DRM.

 

if major labels followed aomp3s model
im sure profits would go up

think about it this way

if someone wants to get a song for both the such and such mp3 player that only accepts such and such formats
they will buy it at that price

if they want more then one format but dont want to do it themselves
they can buy more then one format (and depending if the company offers sales for buying seperate formats the company is making money by copying that song for that person)

 

Just use mytuneslive.com Its legal and awesome! You can’t download music though, that would be illegal…

 

“if someone wants to get a song for both the such and such mp3 player that only accepts such and such formats
they will buy it at that price

i think this reasoning doesn’t go far enough. for eg. the ipod plays drm free music. should the business model of AOMP3 becomes more widespread, others will have to compete and adopt the model to survive.

the itunes store may start selling drm free music before other online stores associated with major labels, only because apple has been ahead of the curve since it’s inception.

“if they want more then one format but dont want to do it themselves
they can buy more then one format (and depending if the company offers sales for buying seperate formats the company is making money by copying that song for that person) ”

who’s rich & dumb enough to pay for the same thing more than once, lord of the ring fans? i don’t buy drm’d music and never will. i bought one song from the ITMS, couldn’t burn it as an mp3 and that was that.

surely the record labels would LOVE it if people had to buy their crap over again, look what cds did for their industry! but really, the freedom and quality every succeeding technology brings belongs to the consumer not the seller. content control is evil, evil, evil.

 

- AllofMP3 succeeds because it’s cheap, DRM-free and offers a variety of formats.
- AllofMP3 will be shut down eventually, count on it. Whether or not they re-emerge elsewhere or as a different service remains to be seen.
- The record labels, RIAA, MPAA etc., will NEVER abandon DRM because their whole business model is based on GREED. Have you ever seen a poor record company exec??

 

In the dance music world DRM-free digital music is the norm. Look at http://beatport.com
http://traxsource.com

to name just a couple of stores (There are tons).

Beatport provides music in 320kbs mp3s, 192kbs mp4s and full wav.
The music costs more and people are willing to pay it. I’ve personally bought about 500 tracks from beatport.

M

 

When the RIAA, in a move that will someday be cited as the most foolish marketing move ever made, dispersed the Napster community, I always felt that they had missed the good move. They should have worked with Napster to provide the official, good, clean, version at the top of the search results and revised the system to take money for that version. I would have paid from day one. The only tracks I would have suffered through the desultory quality of peer-to-peer would be ones that are unavailable otherwise. AllofMP3 has again demonstrated that truth.

 

Do you really thik the artists get ANY money from the online sale of their music. They have RECORD deals, which I’m sure includes CDs and tapes, but unless they have contracts for downloadable music, you can be sure the record companies have exploited them.
Does anyone else remember when they got the “work for hire” bill passed, that took ALL of their rights away overnight. Saying that they were basically factory workers being paid wages, and therefore no longer owned their own music.
If todays artists were smart, they would dump their current contracts, and post their work to a DRM-free universal music hostings site, and money money directly. Any 11 year old with a computer can MAKE music today if they have talent, you no longer need the labels.
And as far as the artists getting paid, boo hoo, can anyone else here record themselves working once, and hand it in to the boss and expect to get paid everyday, NO. Why does everyone think that artists/actors should be.
If they want to get paid, let them get paid the way they have been since the beginning of time, performing live.

 

I’ve been a happy customer for a while. Prior to this, my last music purchase was about 2 years ago when I bought one CD as a gift. I wasn’t using P2P networks either, I just stopped getting any new music that wasn’t given to me.

I even used AllofMP3 to get mp3s of all my old vinyl - financially ruinous if I went to the store and bought overpriced reissues on CD.

The CD prices are inflated by the marketing and production models, and online services with their DRM schemes promise to make me pay several times for music I buy because I’m getting a license instead of the product.

If the music industry were to follow this model, they - and by translation the musicians:
- would all make more money
- true pirating would diminish (container loads of CDs coming from eastern Europe and China are the real piracy problem)
- new musicians would fare better because labels could get behind more groups for less risk and capital cost

If AllofMP3 shuts down, I will probably stop buying music again until it’s worth my while. I think there are a lot of other people willing to pay for ease of use and no DRM, and who feel that the studios are run by a bunch of greedy asshats who want to bill us over and over for the same product.

 

I am a bit of the opinion that “artists” should perform “art”. Nowadays, music is Big Business and I would welcome a return to the days when artists made their money by patronage. Specifically, music artists would look to make money from concerts, and free distribution of their music would make their concerts much more popular and hence profitable. I am very much against the idea of buying music because some stuffed-up suit in a Big Label boardroom reckons it could be a money spinner. Let artists make money when their music is appreciated by people - not because a label pushes it with heavy publicity.

Sure, new music will spread by means of a popularity contest, but hey, hasn’t it always been that way? Can anyone think of a better solution?

I don’t download much music, but I’d never buy DRM’d stuff. Goes *way* against the grain. And if neither artists nor labels get royalties or license fees, well to be honest, I couldn’t care less. If you’re not good enough to make money with your music, get a job and make music in your spare time. Maybe one day you’ll make the grade.

f.

 

Do these sort of sites matter when you can search for music using google.com or sangeetix.com or sfish? Sure, these sites do not index all music and it is not high quality.

 

I wonder why IRAA find IOMOIO.COM legal. Their prices even lower comparing to AllOfMp3. CC or MC never banned their accounts. Iomoio.com quotes Berne convention and Labels can’t argue with that. My guess Iomoio.com would become first legal, cheap DRM free, music seller in the world.

 

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