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Could Putin’s War Bring Back Russian Piracy?

As Western companies leave, the Russian music market will revert to piracy. Could it transcend borders?

Over the next few months, the music business in Russia will essentially shut down. Music will continue to be made – as well as marketed, presumably – but it’s hard to imagine how it will be monetized. On March 8, Universal Music Group announced it would pull out of Russia in the wake of the country’s unprovoked invasion of Ukraine, followed on March 10 by Sony Music Group and Warner Music Group. Much of the infrastructure of the modern music business is going, too: Spotify has suspended premium accounts, and YouTube and TikTok have cut some functionality. That leaves some local players — but any business in Russia will have a hard time taking payments without the credit card companies and payment systems that have stopped doing business there.

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The companies pulling out of Russia did the right thing, but they also made a virtue out of a necessity: They could have had no practical way to make money.

By the standards of the recorded music business, Russia doesn’t amount to much — the business there took in just $200 million in 2020, according to IFPI — less than the purchase price of some big songwriters’ catalogs. (My colleague Glenn Peoples looks at the issue in more detail.) But it was growing — up 30% over 2019, driven by subscription streaming — and consumers there have become accustomed to listening to music online.

So with the money gone, what happens to the music?

The Russian music business won’t go back to 1986 — the winds of change have already blown through. But it could go back to, say, 2006, when the Russian-run pirate music site allofmp3.com made music available illegally worldwide. The site claimed it had the rights it needed to operate from the Russian Organization for Multimedia and Digital Systems, which licenses Russian radio stations and digital services — in Russia, although the site was available worldwide – but it was sued by the RIAA in the U.S. and then eventually shut down — reportedly under pressure from the Russian government.

What if that pressure now operates the other way? Vladimir Putin’s government is tightening its control over the internet, but it seems more interested in dominating it than in shutting it down. So it wouldn’t be surprising to see unlicensed online music services started by oligarchs who could be rewarded for their loyalty with a good business opportunity and, in turn, make sure that any news on the service has a point of view the government can get behind. Since Russia is already subject to sanctions, it’s unlikely to pay rights holders, and the government might view illegally distributing their material as a sanction of its own.

What if those services don’t stop at the border, though? With the ruble falling in value, Russia will need hard currency, and one way to get it would be to let an advanced version of allofmp3.com distribute Western intellectual property as a for-profit business. Imagine knockoffs like Nyetflix, Spyotify, and YooToob offering all-you-can-eat streaming deals for $5 a month — payable with cryptocurrency. Russia has never exactly prioritized the protection of intellectual property — the RIAA has had to sue the Russian stream-ripping operation FLVTO/Kurbanov in a U.S. court — but the situation there could get even worse if the government’s tendency to ignore piracy turns into outright encouragement. Many European countries have legal mechanisms they could use to block such sites, but it would be harder in the U.S.

Even if these sites couldn’t be taken down, however, enough pressure could be put on payment processors and other intermediaries that they would become inconvenient to use. The Internet tends to eliminate middlemen — then create new ones in their place.

But the real threat here is that Russia might not be the last market to slide backward into the bad old days. Over the last decade, the global revenue generated by recorded music has skyrocketed — from $15.8 billion in 2011 to $21.6 billion in 2020, according to IFPI. Most of that growth has come from the success of subscription streaming in established markets like the U.S., but some of it comes from markets that barely registered during the CD boom of the nineties, like those in the developing world and Eastern Europe. In 2016, the recorded music market in Russia was worth $58.9 million, according to IFPI. The business in other countries has risen along with it — mostly because those countries have become more modern, more connected, and in most cases, more capitalist.

That only has so much to do with the music business, of course, and whether it continues has more to do with whether we’ve arrived at “The end of history” (as political scientist Francis Fukuyama famously claimed in a 1992 book) or the moment when “The jungle grows back” (to quote the title of a 2018 book by historian Robert Kagan). Right now, it looks more like the latter. So it’s worth thinking about how future fractures in international relations — however unlikely they appear to be at the moment and however much we hope to avoid them — might affect the media business. It’s hard to imagine, for example, that anything could interfere with Western trade with China, which is now the seventh biggest market for recorded music.

A month ago, however, it was hard to imagine a war in Europe.