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Business News (more headlines) 02-16-2014

U.S. Government Names Russia's VKontakte Among Worst Piracy Offenders

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The Office of the U.S. Trade Representative (USTR) identified Russian social networking site vKontakte as one of the worst "notorious markets" for piracy, according to a report. This marks the fourth time in a row the Russian site has been listed as a "notorious market" by the USTR.

With more than 80 million registered users and 35 million unique Russian visitors every month, vKontakte is the most popular online social network in Russia. It is also available to a wider international audience in many languages, including English. According to Alexa, the site is the 22nd most popular site worldwide and the 2nd most popular site in Russia.

From the report:

vKontakte.com (also operating as vK.com): The Russian site vKontakte.com, in the List since 2011, is styled primarily as a social networking site, and it is extremely popular in Russia and 11 surrounding countries. While as a general matter, social networking sites can serve many salutary purposes, this site's business model appears to include enabling the unauthorized reproduction and distribution, including streaming, of music and other content through the site and associated software applications.

"VKontakte has clearly made a cold, calculated business decision to forego licenses and serve up access to infringing music," said Neil Turkewitz, EVP, International RIAA. "Given the number of registered member accounts, the scale of damage to the Russian domestic and international music community is staggering. For the fourth year in a row, the U.S. government has called out vKontakte. We hope that vKontakte's new management will quickly distance itself from its predecessors and will either become a licensed distributor of music or dismantle its infringing music service. There have been some reports that vKontakte plans to launch an IPO in the U.S. The firm's track record on these issues will undoubtedly be thoroughly scrutinized by regulators, exchanges and investors before any access to the U.S. markets is considered."

The site's music functionality enables users to upload and share music and video files via profile pages, which includes hundreds of thousands of unlicensed copyright works. Its dedicated content search engine enables all other members of VK to search for and instantly stream infringing content uploaded by any other user. In addition, third party software developers have distributed mobile applications that enable non-VK members, via their smartphones, to search for and download unlicensed works available on the site.

"As a bright spotlight shines on Russia for the Sochi Olympics, it is the perfect time for vKontakte to demonstrate that it is part of a new Russia that protects intellectual property, and that fuels creativity rather than stifling it."

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