AllofMP3.com may be a successful music download service, but the recording industry is decidedly unhappy about it. According to The New York Times, the Moscow-based music service takes advantage of a loop hole in Russian law that allows it to sell music without consent of the copyright holders. So far, the likes of Warner, EMI and Universal have been unable to convince the Russian courts that AllofMP3.com is operating outside the bounds of the law.

AllofMP3.com sells music by the megabyte instead of by the track, like Apple's iTunes Music Store (iTMS). The service offers surprisingly low prices: ten songs can cost as little as US$1, compared to $0.99 per track at the iTMS. The music purchased from the site has no copying restrictions, either.

According to Russian law, royalty fees collected from the sale of songs should go to a collection society that acts on the rights of copyright holders, even if they haven't authorized the company to represent them.

Even though the service is based in Russia, anyone with an Internet connection can purchase music from the site. Music industry officials claim that AllofMP3.com is a commercial piracy site, and that the fees it collects are never passed on to artists and recording labels.

Neil Turkewitz, executive vice president of the Recording Industry Association of America, "It is totally unprecedented to have a pirate site operating so openly for so long."

The issue may become more of a problem for Russia than it has before. While the recording industry is lobbying to change the laws and take AllofMP3.com to court, it may also prevent Russia from gaining entry in the World Trade Organization. U.S. trade negotiators have warned that the Web site may be enough to block Russia's entry.

Shutting down the site would be a powerful good faith gesture on the part of Russia, commonly seen as hub for intellectual property theft and digital piracy.

Consumers, however, may not be as happy. Next to the iTunes Music Store, AllofMP3.com may be a small player, but it is seen as the second most popular music download service.