AllofMP3.ru said its business model was moving toward an ad-supported distribution of free content. "We will lose revenue from music sales, but we hope that the advertising will more than make up for it," said Vadim Mamotin, director general of the site's parent company, Mediaservices.

The site, which previously charged about $1 per album, is offering consumers a new software program that allows them to download any song from the site for free. AllofMP3 claims to have a catalog of hundreds of thousands of albums, increasing at a rate of 1,000 per month.

Users of the new service will only be able to listen to songs by using the AllofMP3 software, and the songs will be usable on just one computer at a time. The interface, called Music for the Masses, will initially be available for Microsoft Windows, with an Apple version arriving in several weeks, Mamotin said. Consumers who wish to transfer their songs between computers or to a music device like an iPod or another MP3 player, will still have to pay for the music.

Low prices and ease of use have made AllofMP3.ru a consumer favorite among music download sites, but the site -- which claims to operate legally under Russian copyright law -- faces continuing legal battles with the music industry and harsh criticism from the U.S. government.

The U.S. trade representative, Susan Schwab, warned several weeks ago that continued operation of the site signaled a lack of respect for intellectual property law that could jeopardize Russia's long-sought entry into the World Trade Organization. Economic Development and Trade Minister German Gref said late last week, however, that the piracy issue was no longer holding up WTO talks with the United States.

On Tuesday, the credit card company Visa International said it had suspended card service to the site, citing concerns over copyright issues.

AllofMP3 undertook a rare public relations offensive Tuesday, with Mamotin participating in an online chat with 59 journalists. Defiant, Mamotin maintained that the company operated legally under Russian law. "In six years of operation, we have never been convicted by a Russian court or declared illegal," Mamotin said, speaking through a translator. "Under Russian law, we are 100 percent legal."

Organizations representing global authors, composers, music publishers and record companies issued a statement, however, calling for the closure of the site and reaffirming their stance that AllofMP3 was operating illegally.

From Combined Reports

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