Russia's Zvooq Streaming Service Secures $5M Investment, Partners With Tele2

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One of Russia's leading music streaming services Zvooq is looking to level up, having attracted a $5 million investment and entering a partnership with major mobile phone operator Tele2.

The funding comes from a consortium that includes Russian electronic retailer Ulmart, currently an owner of a 40 percent stake in Zvooq, according to the streaming service. 

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With 1.2 million active users and 5 million installations of its smartphone app, Zvooq is believed to be Russia's fourth largest music streaming service, behind Yandex.Music, Google Play and Apple Music. (As Google and Apple don't disclose their user numbers, it is only possible to roughly estimate the size of their user bases.)

The capital will be used for "expansion of the company's business and development of partnerships with mobile retailers and manufacturers of mobile devices, as well as retailers and commercial brands," Zvooq's co-founder Viktor Frumkin said in a statement. 

Partnerships with mobile phone operators have proven to be a successful strategy for Russian digital music retailers.

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Under Zvooq's new partnership with Tele2, the country's fourth largest mobile phone operator, all Tele2 subscribers will get a 30-day free trial period for Zvooq. After the trial period expires, they will be charged 225 rubles ($3.5) a month to continue using Zvooq. Revenues will be shared, but the two companies wouldn't reveal in what proportion.

Zvooq has already entered into a similar agreement with another Russian mobile phone operator, Beeline.

As Zvooq grows, the streaming service isn't planning to limit its operations to Russia. The company's general director Mikhail Ilyichev was recently quoted by the Russian business daily Vedomosti saying that Zvooq intends to enter agreements with mobile phone operators outside Russia and former Soviet republics.

Two years ago, Zvooq raised $20 million in investment from Ulmart and the Finnish private equity fund Essedel Capital.