Music industry encouraged Visa to pull the plug on AllofMP3.com (updated)
10/19/2006 11:59:01 AM, by Nate Anderson
We reported earlier this week that AllofMP3 has gone on a PR offensive, hiring Qorvis and giving their first press conference to members of the international media. While the conference itself revealed little that was new, a report appeared later that day which said that Visa would no longer process payments from AllofMP3. The timing of the announcement seemed unusual, but the situation has now been clarified somewhat: Visa acted at the instigation of the music industry.
The International Federation of the Phonographic Industry is the entity that looks out for music labels' worldwide interests?think of it as a global RIAA. They have been leaning heavily on AllofMP3 for some time, and have a small office in Moscow that has attempted for years to get the site brought up on charges by Russian prosecutors, but to no avail.
Curious as to whether they were involved in Visa's decision, we contacted their Secretariat in London for more information. A spokesman has now confirmed to Ars that the IFPI did, in fact, bring the matter to Visa's attention, but also said that the actual cut-off date was much earlier than perviously reported. "IFPI drew to Visa's attention the fact that allofmp3.com was not licensed by its members," said the spokesman. "Visa has a policy position of not supporting such sites and had its facilities removed accordingly. In fact, the facility was removed in early September."
Ars has also confirmed that site users have been having credit card troubles for several weeks, though AllofMP3 still claims to be accepting Visa cards. What appears to happen is that the transaction is processed as though it's legitimate, but the credit never shows up in the user's account, and no charge ever appears on their credit card statement.
While the site has managed to stay out of a Russian courtroom so far, it is now in a precarious situation. Paypal cut off payment access last year, and now Visa looks to be doing the same thing. The IFPI has found a way to pressure AllofMP3 that does not rely on the vagaries of the Russian legal system, and if the site can't accept payments, it might be forced to switch to its backup plan: ad-supported, DRM-laden downloads that can't be transferred to digital music players.
AllofMP3 responds (update)
AllofMP3 has just issued a combative press release in response to the actions taken by credit card companies, and they maintain that the decision was unjust and will be fought. "The company believes the action taken by the world's largest payment processors is arbitrary, capricious and discriminatory because Visa and MasterCard lack the authority to adjudicate the legality of AllofMP3's activities and its determination that the company's activities were illegal is patently erroneous and without legal merit. AllofMP3 has not been found by any court in the world to be in violation of any law."
The site even threatens possible legal action, saying that they will "pursue every course of action, including legal options, to reverse Visa's and MasterCard's decision."
What's strange about the entire controversy is that, as we reported earlier today, Visa and Mastercard acted on this more than a month ago. AllofMP3 did not mention this fact to its users and has not responded publicly until now, suggesting that they may not have know about the situation with Visa and Mastercard until it was reported in the press, or that they did know but hoped to work something out quietly in the background without needing to make the matter public.
Now that the WTO, Visa, and the IFPI have been dragged into the story, the fate of AllofMP3 is a matter of international interest, and one wonders how the Russian government will respond to this prolonged attack on one of their country's well-known international businesses.
10/19/2006 11:59:01 AM, by Nate Anderson
We reported earlier this week that AllofMP3 has gone on a PR offensive, hiring Qorvis and giving their first press conference to members of the international media. While the conference itself revealed little that was new, a report appeared later that day which said that Visa would no longer process payments from AllofMP3. The timing of the announcement seemed unusual, but the situation has now been clarified somewhat: Visa acted at the instigation of the music industry.
The International Federation of the Phonographic Industry is the entity that looks out for music labels' worldwide interests?think of it as a global RIAA. They have been leaning heavily on AllofMP3 for some time, and have a small office in Moscow that has attempted for years to get the site brought up on charges by Russian prosecutors, but to no avail.
Curious as to whether they were involved in Visa's decision, we contacted their Secretariat in London for more information. A spokesman has now confirmed to Ars that the IFPI did, in fact, bring the matter to Visa's attention, but also said that the actual cut-off date was much earlier than perviously reported. "IFPI drew to Visa's attention the fact that allofmp3.com was not licensed by its members," said the spokesman. "Visa has a policy position of not supporting such sites and had its facilities removed accordingly. In fact, the facility was removed in early September."
Ars has also confirmed that site users have been having credit card troubles for several weeks, though AllofMP3 still claims to be accepting Visa cards. What appears to happen is that the transaction is processed as though it's legitimate, but the credit never shows up in the user's account, and no charge ever appears on their credit card statement.
While the site has managed to stay out of a Russian courtroom so far, it is now in a precarious situation. Paypal cut off payment access last year, and now Visa looks to be doing the same thing. The IFPI has found a way to pressure AllofMP3 that does not rely on the vagaries of the Russian legal system, and if the site can't accept payments, it might be forced to switch to its backup plan: ad-supported, DRM-laden downloads that can't be transferred to digital music players.
AllofMP3 responds (update)
AllofMP3 has just issued a combative press release in response to the actions taken by credit card companies, and they maintain that the decision was unjust and will be fought. "The company believes the action taken by the world's largest payment processors is arbitrary, capricious and discriminatory because Visa and MasterCard lack the authority to adjudicate the legality of AllofMP3's activities and its determination that the company's activities were illegal is patently erroneous and without legal merit. AllofMP3 has not been found by any court in the world to be in violation of any law."
The site even threatens possible legal action, saying that they will "pursue every course of action, including legal options, to reverse Visa's and MasterCard's decision."
What's strange about the entire controversy is that, as we reported earlier today, Visa and Mastercard acted on this more than a month ago. AllofMP3 did not mention this fact to its users and has not responded publicly until now, suggesting that they may not have know about the situation with Visa and Mastercard until it was reported in the press, or that they did know but hoped to work something out quietly in the background without needing to make the matter public.
Now that the WTO, Visa, and the IFPI have been dragged into the story, the fate of AllofMP3 is a matter of international interest, and one wonders how the Russian government will respond to this prolonged attack on one of their country's well-known international businesses.
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