“Audioclub” is no longer heard – Newspaper Kommersant No. 22 (7467) of 02/07/2023

As it became known to Kommersant, the project of the Audioclub music service from Gazprom Media Holding (GPMH) was stopped. The public version of the platform was released in September, but work on it stopped at the end of 2022. The holding promises to develop music distribution through Rutube and Yappy instead of the Audio Club. Experts believe that it would be difficult for the GPMC project to compete with Yandex.Music, VK and Sound, so the holding decided to focus on video development.

GPMC froze the Audio Club music streaming project, the public preliminary version of which opened in September 2022, industry sources told Kommersant. According to one of them, the main part of the team, including the executive director Kirill Artemyev, left the project, and the remaining employees moved to other areas of GPMC work. The decision to stop the Audio Club was announced to the employees at the end of 2022, the interlocutor of Kommersant specified.

The launch of Audio Club was announced in April 2022, shortly after Spotify left Russia due to the outbreak of hostilities in Ukraine. The legal entity of the service (Tchaikovsky LLC) was established in July 2021, its net loss for 2021 amounted to 65.7 million rubles, follows from SPARK-Interfax data. In the summer of 2022, the Audio Club entered into an agreement with one of the major distributors of digital content, but in the end, the top management of the GPMH did not agree on a budget for the further development of the project, one of Kommersant’s sources says.

One of the features of the service at GPMC was the availability of audiobooks and radio broadcast recordings. From April to August, the service was available only to participants in closed testing. The last update of the Audioclub mobile app was released in November, and the service has 100,000 downloads on Android. The Audio Club pages on VK and Odnoklassniki social networks have not been updated since September 6. At the moment, the previously downloaded application continues to work, the Kommersant correspondent was convinced.

GPMK explained to Kommersant that due to the departure of Western majors, the project “will not be implemented in its original form as a separate music service.” They assured that they did not refuse to develop the distribution of audio content, planning to integrate this functionality into the Rutube and Yappy video platforms.

Based on the current situation in the music market, it is logical to curtail the project for GPMX, the interlocutor of Kommersant among digital distributors believes. As a result of the departure of large foreign platforms from Russia – Spotify, Apple Music and YouTube Music – in 2022, the music streaming market showed a decline for the first time (see Kommersant on February 6): “The holding is trying to make duplicate services for YouTube and TikTok, but in terms of music streaming, the market is actually divided between Yandex Music, VK and Sound, it will be difficult for one more participant to lure away the audience.”

To be successful, the service needs extensive catalogs of performers, a Kommersant source explains, and this requires significant investments: “GPMC may have decided to direct the budget to more popular video projects.”

The Russian music industry was waiting for the launch of the Audio Club, relying on GPMC’s expertise in the media industry, says Colisium International Music Forum producer Sergey Babich: “The holding owns Yappy and Rutube, which created potential for the ecosystem.” He considers it pointless to create a music service within one of the video platforms, given the work already done on the Audio Club.

The decision to freeze “Audioclub” could be due to both the overestimated expectations of GPMK from the service, and with considerations regarding the development of the entire holding as a whole, says Yevgeny Safronov, editor-in-chief of the InterMedia news agency. He admits that GPMC may be able to return to the development of music streaming in the future “with minimal reputational losses”, but this will require at least a rebranding and, possibly, a revision of the concept.

Yuri Litvinenko, Yulia Tishina