Russian Social Network VKontakte Working With Majors to Prep Subscription Music Service

VKontakte
Chris Ratcliffe/Bloomberg via Getty Images

The VKontakte app shown on an Apple Inc. iPhone 5. 

With licensing agreements with all three major labels finally in hand, Russia’s largest social network, VKontakte, has plans to unveil a paid subscription music service in the next six months. Though details are scarce, Russian executives from Universal Music Group, Warner Music Group and Sony Music Entertainment spoke about the proposed service at a panel discussion at this week’s VK Fest.

"Users will still be able to listen to audio recordings for free but some paid functions will appear, such as adding audio to your own account," explained Alexander Blinov of Warner Music Group Russia, according to a report by the Izvestia newspaper. "If you love performers, you have to support them. Musicians must earn a living in order to create new songs."

Blinov was joined by Universal Music Group Russia CEO Dmitry Konnov and Sony Music Entertainment Russia CEO Arina Dmitrieva. The trio stated that some new functions will roll out by the end of the year and that the cost of a subscription will be comparable to the "price of a cup of coffee." The Moscow Times reports that some of the premium functions, which are still being developed, will appear in early 2017.

VKontakte and Universal Music Near Licensing Deal

Vkontakte parent company Mail.Ru Group announced a licensing agreement with UMG on July 15, following similar pacts with other majors, allowing it to fully transition to licensed music on the popular service. Until recently, the network had been flooded with uploaded audio tracks from users. The deal, brokered by VK partner United Media Agency, helps it shed its reputation as the main source of illegitimate digital music content in Russia.

"Our constructive and mutually beneficial collaboration has put an end to earlier disputes with the record companies," said VKontakte CEO Boris Dobrodeyev when the deal was announced. "Following the removal of legal barriers, we can now create new products based on VKontakte’s music service that users will value."

In 2014, UMG, Sony and WMG filed a joint lawsuit against VKontake over copyright infringement. A year later, Sony and VKontakte signed a goodwill agreement, and Sony removed itself from the suit. In October 2015, a Russian court ruled that VKontakte should take additional steps to prevent illegal uploads by its users, but no damages were awarded. Shortly after the ruling was announced, VKontakte and WMG signed a licensing deal, and this month’s pact with UMG completes the trifecta.

Vkontakte boasts more than 88 million registered users in Russia and 143 million worldwide.

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