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As Russian collecting society continues to fight off fraud claims, private copying society seeks to end alliance

By | Published on Thursday 18 August 2016

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Another chapter in the ongoing saga that is collective licensing in Russia. Now the society that collects a private copy levy has announced that it will no longer use the country’s main song rights collecting society, RAO, to distribute monies to rightsholders.

As previously reported, controversy has surrounded RAO since last September when the organisation was accused of embezzlement. The allegation goes that the society used around 500 million rubles of money it collected on behalf of songwriters and publishers to buy four buildings in Moscow, ownership of which was then transferred to other companies and individuals.

RAO management insisted that the property transactions were legitimate from the off, and have since said an independent audit of the society’s operations have confirmed that fact. Nevertheless, in June the boss of the organisation, Sergei Fedotov, was arrested on suspicion of fraud and he seemingly remains in custody.

RSP is another collecting society in Russia, which collects a levy that is applied to electronic devices capable of making copies when they are imported into the country. According to Billboard, RSP has long had a close alliance with RAO, with Fedotov holding senior positions at both organisations until last year. As a result of that alliance, RAO members due a share of the levies RSP collects receive that income via the former society.

But RSP now wants to change that arrangement, so that it will start paying rights owners their royalties directly, rather than handing cash over to RAO. According to Russian business newspaper Vedomosti, the boss of RSP Andrei Krichevsky recently informed RAO management of this decision in a letter the paper has seen.

The move, which will certainly be inferred as sign that RSP no longer trusts RAO with the royalties it administers, will no doubt give further momentum to the group of Russian rights owners who recently called for RAO’s management to be replaced and the society’s constitution to be rewritten.

As also previously reported, before all these controversies there was a proposal that RAO and RSP would actually merge with both each other and the Russian record industry’s collecting society VOIS to create a super society. Though that plan never came to fruition.

Meanwhile there has been chatter of a change in Russian copyright law, either to allow rights owners to launch new rival societies to RAO, or even to abolish the societies and have a government department administer the collective licensing of songs and recordings.