Are you aware of VKontakte? It's essentially the Facebook of Russia that was founded by Pavel Durov. You may remember Durov as the guy who gave Wikipedia founder Jimmy Wales $1 million on stage in January during the DLD conference.
Unfortunately, VKontakte is in a spot of trouble with the law. The Web site, like Facebook, allows people to share content with each other. In the case of VKontakte, however, the content sharing system employed is similar to P2P file-sharing software. Given that kind of power, the users are obviously going to use it to share all kinds of things from music to videos.
Well, the music industry, in this case EMI, is having none of it. They brought a lawsuit against VKontakte which the court sided with the labels on. The social networking site appealed the decision but has lost that appeal as well. EMI is demanding that VKontakte remove the file sharing software from the site.
As Paid Content points out, the removal of the software could drastically impact the popularity of VKontakte. It is by far the most popular social networking site in Russia, handily eclipsing Facebook. With Facebook now running full steam ahead on an IPO, albeit with a few bumps, this is their chance to take Russia.
Facebook is said to be nearing its one billionth member soon and an increased presence in Russia could really help along with that. Facebook also has a file-sharing service, but it's only usable by groups and doesn't allow music or executables. While some enterprising tech wizards could get music files past this limitation, the average Facebook user isn't going to bother.
It's still unknown if VKontakte is going to fight this ruling or if they're going to comply with the record labels' request. Knowing Russia and its wealth of file-sharing options, I'd say that users wouldn't miss the option too much. It might have an adverse effect, but I think they're good for the time being. Now it's up to Facebook to climb the slippery slope of popularity.