AllofMP3: IFPI Raid a Publicity Stunt

Russian music store AllofMP3, which has long been under scrutiny by U.S. and European regulators for selling music without paying any royalties to artists, called out European music industry group IFPI Thursday, claiming the service is legal and a recently publicized raid was made up "sensational news."

The response followed news that the IFPI and British police raided the home of a 25-year-old London man who was selling vouchers to use on AllofMP3 as payment, and then transferring money to the Russian company's off shore bank accounts.

Mediaservices, parent company of AllofMP3, was forced to resort to voucher payments for U.S. and European customers after Visa, MasterCard and PayPal refused to continue servicing the site. Intense legal pressure has come down on AllofMP3, with U.S. music publishers filing a $1.65 trillion lawsuit against the company.

In its statement Thursday, Mediaservices distanced itself from the voucher arrest, saying the man was not an employee or operative of the company. Instead, it claims he was simply reselling "gift certificates."

"The Allofmp3 administration reiterates that the store has never had any activities outside Russia. Thus we do not have any offices or employees abroad. Allofmp3 operates in full compliance with Russian legislation and pays the necessary royalties to the rightholders and authors," it said.

"The members of the IFPI are unable to do anything about the natural crisis the music industry faces in the digital era. Instead they engage in unfair competition practices and political lobbying. They make up 'sensational' news to attract public attention to their activity which becomes less and less valid every day."

Mediaservices continued: "The IFPI and BPI turned a person reselling gift certificates into a 'European office of Allofmp3' in London. After that they initiated the loud 'closure' of this 'office' and an arrest of its mythical 'employee'. The young Londoner is a victim of music majors fighting the irreversible technological progress."

It should be noted that the IFPI never used the word employee, but rather called the individual an "agent" of AllofMP3. In addition, it never asserted that an office was closed down, simply that the man was arrested and his computer seized. After the raid, rumors spread that other European-based AllofMP3 voucher sellers stopped their operations as well.