Visa International and MasterCard Inc. have stopped accepting credit card transactions for purchases of online music made on a Russian Web site accused of selling music illegally, officials for both payment systems said.
San Francisco-based Visa asked member banks not to process purchases from AllofMP3.com as of Sept. 1, said Simon Barker, a spokesman for the company. "The action Visa has taken is in line with legislation passed in Russia and with basic international copyright and intellectual property norms," Mr. Barker said.
MasterCard, the No. 2 payment system in the world behind Visa, ceased accepting credit card purchases on the Web site in early August, said Chris Harrall, a spokesman for the Purchase, N.Y.-based company. "MasterCard does not tolerate the use of its network for illegal activity," Mr. Harrall said.
Charles Martin, a Washington-based spokesman for Moscow-based Mediaservices Inc., which owns AllofMP3, confirmed that Visa had suspended payment processing services on the site, but he was not aware of any other payment vendors who had decided to do so.
AllofMP3.com typically charges under $1 for an entire album and just cents per track. By contrast, an album at Apple Computer Inc.'s iTunes Music Store and other licensed services typically costs about $10 and a song 99 cents.
On Wednesday, a message on the payment section of the Web site notified visitors that credit card payment was not available "at the moment." The site directed prospective customers to make a credit card payment on another site, alltunes.com. That site listed that it accepted payments in Visa and EuroCard/MasterCard. However, Visa shut down payment processing for that site as of Oct. 1, Mr. Barker said.
It was unclear to what extent the actions taken by the credit card companies had affected business on the Web site.
There was no mention of it by Mediaservices officials during an online news conference on Tuesday, although Vadim Mamotin, the firm's director general, said through a translator that the company's business dispute with major recording companies and other copyright owners "has hurt our business."
The Web site operator maintains that by paying royalties to a Russian licensing group, the Web site is in compliance with Russian laws. The music industry contends that the Russian licensing group doesn't have the authority to collect and distribute royalties.
*Update* AllofMP3 retaliates by launching an ad-supported service to allow the free distribution of its content. Making money from ads is all the rage but with music? Some are a little confused as to how this might work. Apparently, the music obtained in this way can only be played on the computer and not transferred to a portal device without payment (but wait, how do they get payment now?). It'll be interesting to see how this one turns out...