Russia's VKontakte, Fresh Off a 'Win' Against the Major Labels, Signs Deal With Country's Largest Publisher

The country's digital music industry continues its push towards legitimacy.

The Russian social network VKontakte, a local equivalent of Facebook, has signed an agreement with First Music Publishing that comes as its first ever music deal with a major Russian rights holder. The deal was announced last week at a news conference by FMP's co-founder Maxim Dmitriyev. A spokesman for VKontakte declined to provide any details of the deal, saying that an official statement is coming soon.

The local daily Vedomosti estimated the deal's worth to be in the vicinity of $2 million a year.

The agreement comes as the social network's major step towards legitimate operation. For years, it has been criticized by rights holders for allowing users to upload illegitimate music tracks.

Last fall, a court ruled that VKontakte should implement an effective content filtering system in a lawsuit filed by Warner and Universal. Sony, which was part of the original lawsuit, earlier signed a goodwill agreement with VKontakte. In the wake of the verdict, VKontakte confirmed its plans to launch a legitimate streaming music service but provided no date for its possible launch.

With a catalog of about 40,000 tracks, FMP accounts for about a quarter of all music rights registered in Russia. It also has an agreement with Sony/ATV.

Russia's digital music market has been leaning heavily towards streaming over the last couple of years. It is dominated by the local service Yandex.Music and international players Google Play Music and Apple Music. Many in the music industry believe that VKontakte, with its global audience of over 300 million users, could also become a major player in the sector once its music service is launched.