UMG inks deal to change Russia’s music business

A new agreement with Universal Music Group gives users of Russian social media networks VKontakte, Odnoklassniki and My World access to licensed audio and video content.

The agreement between the social networks’ owner Mail.Ru Group, the globe’s largest music agency United Music Agency and UMG will see the testing of various monetisation models in conjunction with artists and fans. It will also find the best alternative for delivering the service to the market.

Mail.Ru has now secured partnerships with all three of the leading international music rights holders: Universal Music Group, Warner Music Group and Sony Entertainment.

VKontakte will develop an application in partnership with United Music Agency that will allow the delivery of a range of functions that are central to the agreement. Furthermore, VKontakte will reinstate the music playback function of its iOS application with a number of further improvements being made to the desktop version of the website.

The deal is a significant step forward for the Russian music industry as a whole. Russia is currently ranked 59th in the world for digital sales. The agreement should see Russia climb the ranks for digital sales as the potential for growth and investment in the Russian recorded music industry increases.

With illegitimate music services plaguing the Russian music market in recent years, the introduction of a legitimate service will enable Russian artists to be compensated for their work via the newly available services. Their music will be more widely available and will be delivered in appealing ways through social media platforms.

The deal will almost certainly attract further attention from other music companies who have long been cautious about investing in the Russian market. This hesitancy has been the result of the tumultuous political environment, economic crisis and internet regulation.

Earlier this month, TMN reported on Spotify’s possible re-entrance into Russia, a move that seems more likely as a result of the new agreement. Spotify has been active in 2016 with a global growth strategy that has seen the company expand to Indonesia and identify their intentions for a Japan launch.