Oleg Butenko

Oleg Butenko

Courtesy Photo

Russia's biggest social network VKontakte (VK) expects to launch its long-awaited legitimate music service before the end of 2016. "We would like to do it this year," Oleg Butenko, founder of United Music Agency (UMA), which handles licensing deals for VKontakte's owner, Mail.ru Group, told Billboard in a phone interview.

He added that the service will come in a form of apps for mobile devices, as well as a program for desktop and laptop computers.

While all the specifics of the new apps are not yet known, they are likely to feature caching of music on mobile devices, background playing, audio advertising and targeted advertising.

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"We will be experimenting," Butenko said, adding that the paid app will have several pricing options, based on extra services provided, but music tracks will be still available for free streaming, just as they currently are.

"You can't just tell users that they'll have to pay now for just being able to listen to music," Butenko observed. "This has to be a gradual process."

Earlier this month, Mail.ru Group struck a licensing deal with Universal Music Group (UMG), which, coupled with similar earlier agreements with Sony and Warner, ended a years-long battle with international music majors over copyright infringement.

VKontakte

Butneko declined to comment on the value of the deals with the majors, which, according to Russian media reports, stipulate an $8 million minimum guarantee in a three-year deal with UMG, $2.5 million a year for Warner and $2 million a year for Sony Music.

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Meanwhile, VKontakte now faces the huge job of identifying user-generated music tracks and replacing them with legitimate copies under license agreements, a job that might take months.

"We've begun the process of filtering and finger-printing, so to match what has already been uploaded to VKontakte with licensed content we have obtained access through the signed licensing agreements," Butenko said.

Currently, a search for a popular artist's track copyrighted by an international major is likely to produce several user-uploaded illegitimate versions, but, according to Butenko, this will change.

Still, artists who want to share their own material, will continue to be able to do so.

Admitting that Russia's streaming segment is still in formative stages, Butenko stressed that its potential for growth is huge.

"We plan to form the segment by decisions we are making," he concluded.