IFPI welcomes court ruling finding vKontakte liable for copyright infringement

18th May 2012, Moscow

IFPI, representing the recording industry worldwide, today welcomed the verdict of the Russian appeal court on 17th May that confirmed social networking and downloading site vKontakte is liable for copyright infringement.

The case against vKontakte - often called the "Facebook of Russia" - was brought by SBA Music Publishing and SBA Production and members of the Gala Records Music Group, the subsidiary of EMI in Russia. The cases were based on vKontakte making many of Gala's music compositions and sound recordings available without licensing agreements. The judgment by the Saint Petersburg appeal court upheld the earlier ruling by the commercial ("Arbitrazh") Court of Saint Petersburg in January. Several further cases are pending.

Frances Moore, chief executive of IFPI, says: "This judgment sends a clear signal to those in Russia that seek to build their businesses on the back of other people's content. We urge vKontakte to take immediate steps to stop its service being used to infringe copyright on a massive scale.

"Widespread digital piracy is preventing Russia from developing a thriving legitimate digital music sector and this in turn denies Russian artists a chance of success and starves them of investment by producers."

vKontakte is a business that has been valued at between US$1.5 and US$3 billion, in part due to the audience it has built up by offering infringing content. It attracts users by offering access to content it is not licensed to provide, such as Gala's music.

vKontakte is Russia's most popular online entertainment platform with more than 110 million registered users and is one of the top 50 most visited sites in the world, attracting more traffic than BBC Online or CNN.com. The unlicensed vKontakte music service allows streaming of music from an extensive catalogue of Russian and international sound recordings and encourages software developers to create apps for illegal downloading of content using vKontakte.

The Russian music market:

Russia is a potentially exciting growth market for music, although it is currently being held back by a culture of copyright infringement. If Russia's burgeoning legitimate business can effectively protect itself against such infringement, the country could become a top 10 music market.

The Russian market has declined substantially since 2007, from US$191 million to US$76.6 million. During that time, the digital market has grown, yet last year saw a substantial fall even in digital revenue, which is attributed to piracy.

A list of legitimate Russian music services can be found at www.pro-music.org

For further information contact: Daniel Friedlaender, IFPI European Office Email: daniel.friedlaender@ifpi.org Tel: +32 (0)498 255 156

Alex Jacob, IFPI London Email: alex.jacob@ifpi.org Tel: +44 (0)20 7878 7935 (Press Office)

Olga Kim, SBA/Gala Records Inc, Deputy General Director Legal Affairs Email: okim@galarec.ru Tel: +79687059449