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RIAA Highlights Russian Service VKontakte, Others In Report To U.S. Government About Markets Rife With Music Theft

(Originally published on October 26, 2011 and available here)

WASHINGTON (Oct. 26) – In a filing with the U.S. Trade Representative’s (USTR) office today, the Recording Industry Association of America (RIAA) outlined how Russian social network site VKontakte and its unlicensed music service is increasingly undermining the growth of the international legitimate music marketplace.

As part of its submission on “notorious markets” -- both physical and online markets whose businesses are primarily driven by the illegal sales or downloads of unauthorized music – the music trade association highlighted Russia’s most popular online social network. According to the RIAA’s filing, the service’s music functionality is “specifically designed to enable members to upload music and video files, hundreds of thousands of which contain unlicensed copyright works. Its dedicated content search engine enables other members to search and instantly stream unlicensed music and movies, giving VKontakte an unfair competitive edge over other social networks that do not offer free access to unlicensed material.” VKontakte has more than 120 million users, currently ranking among the most visited sites in Russia and is among the 50 most visited in the world, according to online rankings.

The RIAA highlighted other services and markets in its report, including China’s Sohou/Sogou, which operates a service called “Sogou MP3” that provides easy, quick access to links – for streaming or download -- of music files from unlicensed sources. Sogou is no neutral or passive search engine that simply delivers results at the request of its users. Rather, it is actively involved in the manipulation of its database of unlicensed music by, for example, creating various categories of charts including “Albums Top100”, “New Songs Top100”, “Songs Top100”, “New Single Pre-Release”, “US/Europe Chart”, “Japan/Korea Chart”, “UK Chart” or “US Billboard Chart.”

“What’s particularly offensive about some of these companies is that they intentionally launch music services without any form of licensing as a cynical ploy to gain market share and make more money on the back of artists, labels, songwriters and everyone else involved in the music community,” said Neil Turkewitz, Executive Vice President, International. “Some of the firms we’ve highlighted have even announced plans to launch U.S.-based IPOs. No company dependent on a theft-based business model deserves the backing of the U.S. capital markets or the approval of the financial regulatory agencies.”

Also included in the RIAA filing -- online content distribution hubs (sometimes known as “cyberlockers”) that are extensively involved in the storage and trading of copyrighted works. Notorious services such as MegaUpload thumb their noses at international laws, all while pocketing significant advertising revenues from trafficking in free, unlicensed copyrighted materials. The services are directly engaged in the storage and distribution of infringing materials without having employed reasonably available tools or practices to limit their role in such illegal activity. For many of these services, there would be no economic viability in the absence of engaging in digital theft. In its filing, the RIAA singled out MegaUpload and other similar hubs as “notorious markets” rife with illegal music, movies and other copyrighted works.

A full copy of the RIAA’s submission to USTR is available upon request.