The VK Beat Records label will be reorganized and will become part of VK Music Records

Reorganization has begun on the Russian music market. VK (MOEX: VKCO) closes the label, which was focused on working with rap artists, the artists’ music catalogs and employees will move to VK Music Records. Since 2022, about six new music companies have appeared in the Russian Federation: in February alone, two new labels launched structures of Gazprom Media Holding. Market participants expect that due to industry competition and talent shortages, some labels may close.

The VK Beats Records label (works with rap artists) will be reorganized and will become part of the VK Music Records label (develops pop musicians), Kommersant discovered in SPARK-Interfax. The headquarters of VK Beats Records has already been reduced, according to Kommersant sources in the media market. VK confirmed that all music catalogs of VK Beats Records artists have been transferred to VK Records, noting that the department’s employees have joined the main label’s team.

The active launch of new music labels began after Warner Music, Universal Music and Sony Music stopped working in the Russian Federation in 2022 due to hostilities in Ukraine. VK launched VK Records in the fall of 2022, its structure included two directions – VK Beats Records and VK Music Records. The label’s business model involved promoting artists on a 360 basis (distribution, production, content promotion, organizing concerts and advertising activities). Then MTS, Group of Companies “Riki” and former top manager of Warner Music Bakhtiyar Aliev, video service Yappy (part of Gazprom Media Holding) launched their labels (see “Kommersant” on February 9).

On February 27, Gazprom-Media Entertainment Television (GPM RTV) announced the creation of its own label: the Druzhba Music company will be headed by music producer Denis Dubovikov. The company clarified that the library of the Druzhba Music label contains about 2.7 thousand units of content: this is music commissioned by the subholding for shows and series, as well as new original music generated by neural networks.

TNT (part of GPM RTV) clarified to Kommersant that the label’s priority will be systematization of the library, its monetization and the production of original content. “Supporting 360 artists is a logical step for which we have all the necessary resources,” TNT said, while clarifying that “the delivery of music to streaming will be carried out later.” This is not the first attempt by GPMH to enter the music market: the company launched the TNT music label in 2019.

The reorganization of VK Beats Records is due to the fact that the label has not shown results, believes A&R director (searches for new artists) of the S&P Digital label Denis Glazin: “To differentiate, you first need to fill the catalogs and sign many artists, and then highlight narrow genres.” “A label that is focused on only one genre greatly limits its competitiveness in the industry,” notes A&R director of the Koala Music label (manages the catalog of Sony Music Group, which has left the Russian Federation) Grigory Yulkin.

The Russian market is already oversaturated with labels, so the closure of one of them was expected, say interlocutors in the music market interviewed by Kommersant. At the same time, questions are raised rather by the opening of new labels, sources say: “There is a shortage of qualified specialists in the industry who can build an artist’s strategy from scratch to a full-fledged product.” Therefore, suggests Kommersant’s interlocutor in one of the music publishing houses, in a year or two we can expect a massive wave of layoffs of new structures: “We have already seen something similar with the TNT Music label.”

Yulia Yurasova