Controversy Over Russian Collection Society Continues, Major Labels Urge Government to Back Off

Andrey Rudakov/Bloomberg via Getty Images
The skyscrapers of the Moscow International Business Center in Russia photographed on Oct. 28, 2014. 

Amidst continued uncertainty over copyright royalty collections in Russia, the local music industry is expressing concerns about the government's proposed plan to take control over the sector.

A letter from the recording industry in Russia -- signed by many prominent players including the heads of Universal Music Russia, Warner Music Russia and Sony Music Russia -- was recently sent to first deputy prime minister Igor Shuvalov and quoted by the business daily Vedomosti, government control would destroy the existing system, not reform it.

The government's control over copyright royalty collection would lead to prevalence of state interests over rights holders' private interests, the letter says. Signees also point out that, under the Agreement on Trade-Related Aspects of Intellectual Property, signed by Russia, intellectual rights cannot be transferred to government institutions.

The government has become more serious about taking over the sector -- a position first voiced a year ago, but which received no support at the time -- just as the country's sole state-approved collection society for authors' rights, RAO, remains mired in controversy. 

Last week, a Moscow court declined to release the RAO's general director Sergei Fedotov from jail. Fedotov has been jailed since late June on suspicions of fraud. Meanwhile, RAO is effectively split; a group of its members held a conference in late August, replacing Fedotov with Maxim Dmitriyev, head of First Music Publisher. However RAO's management insists the conference was illegitimate, as it could only be called by the organization's board, not a splinter group of members.

Last week, two members of RAO board members filed a lawsuit questioning the outcome of the conference, but bizarrely filed their lawsuit not against the organizers of the controversial conference, but against RAO itself.

A spokesman for RAO explained the confusion to Billboard.

"You can't file a lawsuit against a bunch of people with no legal status," he said. "So, RAO is the main defendant, and those individuals are included in the lawsuit as third parties. Now the court will be able to make a decision about the legality of the conference."

Over the last week or so, the battle over control of RAO has heated up. According to RAO management, Dmitriyev has made attempts to block RAO's bank accounts.
"He was unable to do so," RAO's spokesman said. "There have been no changes to the register of organizations, and we're working normally."

Meanwhile, Dmitriyev was quoted by Vedomosti as saying that his appointment will be soon confirmed by the country’s justice ministry. The ministry, however, says it has no right to do so.

Now, the court's decision on the legitimacy of the conference is expected to clarify the situation over RAO, but a date for a hearing has not yet been set.