Tuesday, May 2, 2017

‘Russia’s Facebook’ launches fully licensed new Spotify rival | Music Business Worldwide

In a Spotify, Apple Music and YouTube dominated streaming world, it’s all to easy to ignore the power of music platforms in developing markets.

With over 100 million active users, Russian Facebook VKontakte (VK) has the same sized audience as Spotify’s last confirmed active user base (across both freemium and premium users).

It’s just launched an in-app licensed streaming service.

VKontakte offers a subscription tier priced at 149 rubles ($2.60), in addition to a free ad-supported option, as reported by Billboard.

The first version of the service was initially unveiled in 2016.

It followed years of VK operating as an unlicensed platform that allowed users to upload music, which was available to stream for free by other users.

In 2014, Warner Music, Sony and Universal filed a copyright infringement case against VK.

The record labels asked for an order requiring VK to implement fingerprinting technology to delete copyrighted works and prevent them from being re-uploaded.

In addition, Sony, Warner and Universal demanded compensation to the tune of 50 million rubles ($1.4 million).

Sony Music Entertainment settled out of court with the platform in July 2015 – an agreement believed to be contingent on VK’s promise to begin monetising its content.

Universal and Warner pressed on with legal action, but the labels suffered a major legal defeat in last year when the court overturned an earlier ruling, finding that VK was not liable for copyright infringement.

Warner bowed out of the battle with its own out of court settlement, leaving Universal to fight alone.

Then in July last year, Universal brought to a close its two-year lawsuit against VK.

The major reached a settlement with VK parent Mail.ru and licensed its social media platforms – VK, Odnoklassniki and My World – for future use of video and audio content from UMG artists.

According to Russian newspaper Vedomosti, the Universal agreement will include an $8m minimum guarantee from VK to cover a three-year period, which works out to around $2.7m a year.

Warner reportedly signed a $2.5m-a-year deal, while Sony has agreed a $2m-a-year contract.

That means the majors have accepted a minimum guarantee of around $7m a year between them, or $21m in total across the three years. VK is also licensed by Merlin Network and local labels.

It’s quite the commitment; in 2015, the IFPI reported that ad-supported streaming in Russia generated $3.4m in revenues in 2015, and $5.2m from paid-subscription streaming.

In a blog post notifying users of the new updated and legitimate music service, VK Chief Executive Officer Andrey Rogozov said: “The audio section has been a part of the social network practically since the beginning of VK’s existence.

“Unlike other music services, VK users not only have the possibility to upload music without any restrictions, but they can share music with friends.

“This became the secret to success. VK united people with diverse music preferences, gave them the ability to converse, create themed communities, search for rare tracks and distribute beloved music without limitation.

“Due to VK music, thousands of new artists in Russia and the CIS countries became popular, such as the famous Noize MC, Max Korzh, Oxxxymiron, Jah Khalib and many others.

“Tens of thousands of music communities appeared, and their creators learned to make outstanding music collections that worked better than any recommendation systems.”

Now, paid subscribers to VK’s service get unlimited streaming of tracks on desktop and mobile. Seperate mobile app Boom is required in order to save tracks and listen offline.

Like Spotify and Apple Music, users can make playlists and share them and follow music collections made by others. A ‘smart recommendation system’ is also included.

In addition to offering licensed content, VK will follow in the footsteps of Indian streaming service Saavn in exclusively distributing tracks from new artists in order to help them reach a new audience.

Russia has a population of 144m — more than double that of the UK.

Its average income per capita is $23.8 PPP, where the UK’s stands at $40.5 PPP. The US is higher still at $56.4.

Apple Music is available in Russia, while Spotify has yet to arrive.

Music Business Worldwide

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