Business rbth.ru // October 9, 2013 // P3
No love for the Russian SOPA law Making heads and tails of the enhanced antipiracy law
Unpopular solutions to piracy The need to protect intellectual property rights in Russia has long been acknowledged. The huge volumes of losses to copyright holders from illegal downloading in the country cannot be accurately calculated, but statistics show that Russian Internet users annually install about $3 billion worth of counterfeit software. The U.S. film industry has said its losses from piracy in Russia amounted to $250 million so far in 2013. Despite these facts, few were happy with the solution developed by the Russian government. The law was written in such a way to protect major film and music companies, but not software firms. More than 100,000 signatures were collected against the law. Most Russian online companies joined the protest, and some sites placed protest messages on their home pages, as Wikipedia had done to protest SOPA. Nevertheless, the law quickly went into effect. Websites kinozal.tv and opensharing.org were forced to take down illegal uploads of popular TV series, including
“Game of Thrones” within the first month after the law was adopted. One group that was more or less satisfied were big publishers. According to Yuri Ammosov, head of the Directorate for Innovation at the Analytical Center of the Russian Government, torrents deprive publishers of the revenue from major new book releases. “A bestseller, uploaded on the Internet, greatly decreases the sales of paper books, from 40 percent to 80 percent, according to my estimates,” Ammosov said. “Contrary to the claims of pirate supporters, their activities cannot be considered as advertising of paper and legitimate e-books — a rare book is favored with re-reading.” But even publishers and writers have protested that
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Over the summer, a new anti-piracy law was passed in Russia that was dubbed the Russian SOPA law after the United States’ ill-fated Stop Online Piracy Act. Under the new law, copyright holders who request that a file-sharing or torrent site block access to copyrighted content can file a court case for violation of intellectual property if site owners and hosting providers do not close access to the information within twenty-four hours of the request. The debate over the SOPA law in the U.S. Congress provoked protests and blackouts of major websites, and the response of Russians to their country’s new drive against online piracy was no different. The day Russia’s anti-piracy law went into effect, widespread protests erupted, led by Russia’s large community of users of torrent sites. Many Russian Internet users believe that content creators should be grateful to those who upload content in violation of copyrights since the copyright holders are all-powerful corporations that are simply fleecing artists and preventing large swathes of the population from enjoying films and music.
Don’t like this law? Wait for the next one. As if the original anti-piracy law wasn’t controversial enough, Russia’s parliament introduced a new bill to expand or “enhance” the law on Sept. 17. The new bill would allow websites containing any content suspected of copyright infringement to be blocked. The new draft is also earning con-
siderable public backlash. The earlier law, which came into force on Aug. 1, targets the unauthorized distribution of movies and TV shows. It allows copyright holders to seek to blacklist websites they accuse of hosting pirated films and shows without contacting the uploader or obtaining a
formal court ruling on the legality of the content.The draft law also seeks to require copyright holders to contact uploaders of questioned content before requesting that the site be blacklisted. Russia has separately tried to ban sites it says promote suicide, drugs and child pornography.
cases involving books were not accepted for accelerated processing under the new law, unlike films and music. “Translation is real intellectual property,” said Anna Lomteva of the TransLink Translation Bureau. “Those who read Shakespeare in the original and in translation know that [the translation] is an independent work of art. However, the practice of protecting the rights of such intellectual property is a rare exception.” Amendments to the law are currently making their way through the State Duma, but Alexander Khegay, deputy head of Information Security Department at LANIT Network Integration, doubts that the changes will affect the rights of software producers. “The draft law is directly connected with the companies involved in producing or distributing of multimedia content. If we, as a system integrator, can benefit from it, this help will be insignificant,” Khegay said. The experience of the United States notwithstanding, other countries have used anti-piracy laws to make a serious dent in illegal downloading of books, films and music — but the end of illegal downloading actually had an unexpected effect. According to a study by the Munich School of Management and the Copenhagen Business School, after the closing of the popular file host Megaupload, an increase in box-office receipts was only noticed by major blockbusters. In most cases, ticket sales remained consistent with what they had been when the site was operation, and for independent films, box office revenue actually decreased. It seems that for these films, illegal downloads had acted as a kind of publicity that then drove viewers to the big screen.
Sewn in Russia: fashion startup inspired by Ikea the usual trial and error. Launched in 2009, the collection of feminine dresses, which cost $150–200, was too expensive to manufacture and implement. Meanwhile, sales in multi-brand online stores and through corner stores in shopping malls scared potential consumers off and were not good for the brand either, given the high commission rates and the small volume of sales. As a result, Kovelenov decided to concentrate on developing the brand’s own online store and marketing through social networks. The online store, ohmyltd.ru, was launched in spring 2010. The first products were Tshirts and sweatshirts in black, white and gray. Today, the brand sells about 50 designs of everyday basics for women and men. Designs are available in long-sleeve tops, T-shirts and sweatshirts. Kovelenov said that the initial capital amounted to $20,000 of their own funds and about $20,000 of loans. The majority of buyers are from Moscow (70 percent) and St. Petersburg (20 percent). The most active
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IN FIGURES
$40,000 was the initial capital of the business. One half came from Kovelenov’s personal savings and the other from bank loans and loans from friends.
$50,000
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Sergei Kovelenov had the idea of starting his own brand five years ago. Three years later, he turned this concept into a fashion startup called “Oh, my”— a basic apparel brand with ambitious plans to become a leader in this area of the Russian market. The brand is largely inspired by Ikea and focuses on simplicity, warmth and comfort. “The Russian market did not have enough clothing manufacturers specializing in simplicity, let alone promoting it. At the same time, well-informed young people had already taken up Western fashion blogs’ ideas and realized the importance of the basic elements in creating an image. However, to find something suitable in Russia was often very difficult. The second trend that we have realized is the patriotic mood. There was a real interest in everything that is produced in Russia and is handmade,” said Kovelenov. He decided to create a brand for Russia’s “Westerners” — residents of large cities with Western values based on private property, family and education. In its first years, the startup experienced
■ILYA DASHKOVSKY
The “Oh my” brand focuses on simplicity, warmth and comfort. buyers are Muscovites between the ages of 26 and 28. Within two years of its existence, the company brought in monthly sales of $50,000, with an average purchase of $80. Each garment sells on the website for prices ranging between $16 and $80. The clothes are sewn in Russia — in St. Petersburg and in the Leningrad and Moscow regions. Seasonal wool designs are produced in Latvia. “We do not manufacture the garments, we only design and sell them,” said Kovelenov. “We order the fabric from abroad
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through intermediaries, because, otherwise, there will be a lot of red tape with customs, and, in the end, it will cost us more. We import mainly from Estonia and Turkey. We would be glad to purchase Russian goods, but the country simply does not have any normal, high-tech [or textile] industries. We can recall, of course, Ivanovo textile. You can make bed linen using it, for example, but its quality is too poor to sew clothes from it. “ Over the past year, the team has doubled, and now consists of 10 people, however only one of these actually develops and designs
is how much the brand earns in monthly sales after two years in existence. The average purchase at the store’s website is $80. concepts for the clothes. The other nine people work on the way the product and the brand are perceived. The “Oh, my” brand has a few experiments planned for the future. Currently, all the garments only come in black, gray and white. But they will slowly add new colors ot the collections. The company is slated to open stores in Estonia, Turkey and Italy by next year. ■CAMILLA SHIN RBTH