Spotify cancels Russian launch

After spending a year setting up for its launch in Russia, Spotify has abruptly cancelled plans to run operations there.

Alexander Kubaneishvili, the former Google executive who was hired last year to run the Russian operations, has left Spotify. He had been in negotiations with local mobile operators.

Subscription in Russia was to be 500 rubles or about A$9.30, a month.

The Swedish music streaming company, which has 50 million users around the world, was originally going to enter the Russian market last October but delayed it to “early 2015”.

Kubaneishvili told the RBC news agency, "Regretfully, Spotify has decided against launching in Russia for the foreseeable future. There are several reasons — the economic crisis, the political situation, new laws and the regulation of the internet."

The Russian ruble is in crisis after losing 50% of its value, the country is increasingly heading into a recession, and is facing sanctions by the West over Ukraine and Crimea. The Government is clamping down on social media and website freedoms.

The high rate of music piracy in Russia has certainly been a factor behind Spotify’s decision. The local music industry only made 2.2 billion rubles in 2013. Three major record labels are suing the country’s largest website, the Facebook style VKontakte, alleging it is allowing piracy to run rampant.

Spotify is not the only Western company saying Do svidaniya! to Russia. Google is pulling its engineering division out, and NBCUniversal is shutting its Russian pay-TV business.