For years, VKontakte has had a reputation as Russia's "biggest online pirate" and has been on the U.S. Trade Representative's list of "notorious markets."
Rights holders were upset by the vast amount of user-uploaded music available on the service -- complaints over which VKontakte shrugged off, saying it had no control over user-generated content, and asked rights holders to submit requests for removal. Local courts were often satisfied with that argument, recently ruling in favor of vKontakte.
That situation began to change, however when international majors launched a legal battle with the social network two years ago. Sony Music, Universal Music Group and WMG filed a joint lawsuit against the company over copyright infringement and demanded compensation of just over 50 million rubles ($760,000).
Sony and VKontakte signed an out-of-court agreement, and the court later ruled that VKontakte should introduce a better system for control over user-generated content, but awarded no compensation for Warner and Universal. VKontakte later signed a confidential out-of-court agreement with Warner Music Group, and a source recently told business paper Vedomosti that it was close to a deal with Universal Music Group as well.
VKontakte didn't reveal the values of its contracts with rights holders, but the Vedomosti report estimates that VKontakte's payments to music rights holders will total about $10 million a year.
Incidentally, user-uploaded versions of the same tracks remain available in vKontakte's music section.