“User-generated content on legal sites will be the last resort”

Founder of Lotus Music Bakhtiyar Aliyev – about competition between music labels, the loss of foreign catalogs and the risks of growing piracy in the segment.

– How do you assess the prospects for non-core participants to enter the music market? VK, MTS and Riki Group (creators of Smeshariki and Fixikov) recently announced the creation of their labels.

– I’m not joking at all now, but the launch of a label from the creators of Smeshariki and Fixiki is cool. This is logical, because they have a specific area, not mastered by anyone, in which they will feel better than others – children’s content. They understand like no one else that children’s content is the most reviewed. Children can watch one cartoon dozens of times a day. The cartoons Masha and the Bear have billions of views, just like Smeshariki. It’s the same with music. If a child likes a song, he will listen to it on repeat a million times. Therefore, from the side of Riki Group of Companies, the project is logical.

Creating a music label within a holding is always a big problem. VK and MTS have their own music services that compete with Yandex Music and Sound. An artist who has signed a contract with VK will want to be present on other sites. But the question is, will Yandex or Sound agree to develop an artist who works with VK on their sites?

At the same time, these companies have their own strengths: MTS has a ticket operator, marketing resources, VK has social networks. These are opportunities, but it is too early to say how effectively they will be able to use them.

– How did the departure of foreign streaming services last year affect the industry in general?

— At the end of 2021, Russia was the 13th market in the world in terms of the volume of the music industry in terms of money, and the first in terms of growth rates. It was assumed that in 2022 we would enter the top 10 in terms of turnover, but as a result of all events, the market decreased by 30-50%. Yes, local services increased the number of subscribers, because many failed to renew subscriptions to Spotify and Apple Music, but the market dipped in money. Although the big artists still continue to earn quite a lot.

— Considering that the Russian market is now virtually isolated, what are the prospects for the development of local streaming within the country? Spotify and Apple Music work worldwide.

— Our services are developing according to a different model — within the ecosystem. They can work in the negative, but they are needed to involve users. There is a growth prospect: only 200 million people live within the CIS – this is a large market that has not yet been mastered. Bringing only music services abroad without other ecosystem products is pointless. In addition, now everything depends on the purchase of foreign catalogs.

— How important are foreign catalogs for streaming for development in Russia? More than 90% of the music we listen to is in Russian.

– Local streaming needs international directories, because when the user chooses where, he looks at what he gets access to. Naturally, if he buys access to a service that has all the world’s music, including new items, this is a plus. Subscribing to songs of only Russian authors is less attractive than to all world music.

Let’s say a person pays for a subscription, but does not receive new songs, so he eventually begins to wonder why not buy Spotify through a foreign card. As a result, he learns that it is possible to pay for an Indian account, for example, which will cost less than in Russia. For the market to continue to develop, international directories are needed.

Can this problem be solved now?

“Unfortunately, we can only wait until the global situation is resolved.

– Russian services, as far as I know, are thinking about making public content uploaded by users. Will this solve the problem?

“No one wants to shoot themselves in the foot, but we understand that at any moment everything can change. The catalogs of Universal and Warner on Russian services indicate that the latter still have obligations to the majors.

It seems to me that user-generated content on legal sites will be the last resort. In such a situation, it will be very difficult to count on the return of copyright holders to the country.

Interviewed by Julia Tishina