Warner is looking for exits – Business – Kommersant
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Warner Music Group launched an investigation into the Russian division, which continued to enter into new contracts with artists in Russia, despite the parent structure’s statement about the suspension of work in the country due to a special military operation in Ukraine. Russian top management, according to Kommersant, offered the artists to renegotiate contracts with a new legal entity. Previously, Sony Music, which left Russia, transferred the management of Russian catalogs to a local company. The shutdown of Warner Music may deprive domestic artists of access to foreign streaming platforms, and Russian streaming sites will lose some more foreign music.
The Russian division of Warner Music continued to try to secure new contracts in Russia through its local division, even though it officially ceased operations in the country. It was reported by the London The Guardian with reference to received company documents. In particular, the newspaper draws attention to an e-mail from one of the top managers of the Russian company owned by ADA Russia.
The unnamed letter discussed a “possible collaboration”, offered high payouts on a range of music services, and mentioned Russian artists already working with ADA Russia.
Warner Music Group’s ADA Worldwide division, which provides services to independent artists and labels, announced the launch of ADA Russia with an office in Moscow in July 2021, led by Alexander Kasparov.
The letter contradicts the official position of Warner Music Group, which on March 10 announced on the suspension of its activities in Russia, including investments, marketing and advertising, production of all types of physical products. The Warner Music Group told The Guardian newspaper that the top manager should not have been doing business in Russia, and said that they had launched an internal investigation into this matter. Warner Music Russia Deputy General Director for Business and External Relations Olga Kim declined to comment on the situation to Kommersant.
Three Kommersant sources in the digital music distribution market confirm that the Russian structures of Warner Music have continued to work in Russia in recent months. According to them, a number of Russian artists received offers to renew contracts with a new legal entity that had nothing to do with Warner Music.
Warner Music LLC was registered in 2003, the number of employees of the company as of 2021 was 107 people, follows from SPARK-Interfax data. At the end of 2021, LLC revenue amounted to 4.2 billion rubles, net profit – 839 million rubles. As Kommersant’s source in the music distribution market explains, not all Russian artists were signed to this particular structure, some had agreements with the global Warner Music. The company is one of the three largest global music content distributors along with Sony Music and Universal Music. According to Technology of Trust (formerly PwC in Russia), the company accounts for up to 16% in the recording segment in the world and 12% in music distribution.
In March 2021, Warner Music Group bought the indie label Zhara Music of Emin Agalarov and his partner Bakhtiyar Aliyev (Bahh Tee musician), the label was renamed Atlantic Records Russia and became the Russian division of American Atlantic Records (part of Warner Music). This company is headed by Olga Kim. Morgenstern, Slava Marlow, HammAli & Navai, LSP and other artists appeared in the company’s catalog, they were promoted in foreign markets under the Atlantic Records label. Among the Russian artists that have been signed by Warner, according to the Warner Music Russia website, are Mumiy Troll, Artik & Asti, Feduk, Ani Lorak, Yegor Creed, Cream Soda and others.
As Kommersant’s interlocutor in the digital music distribution market explains, Warner Music’s public statement about an audit of the Russian structure may mean that the company is preparing to leave the market completely. “In this case, the main question is what will happen to the Russian catalog, how will the artists return the advances paid in advance in relation to Warner Music, will they still be able to have a presence on foreign streaming platforms.”
According to one of the interlocutors, Russian structures are preparing to separate from the global office, as Sony Music structures in the country have already done. The Russian division of Warner Music, he admits, may be headed by the current CEO of Warner Music in Russia, Alexander Blinov. Mr. Blinov, through an assistant, declined to comment. The management of the Russian catalog of Sony Music was transferred to Kiss Koala LLC (see “Kommersant” of September 8). At the same time, the company withdrew the catalogs of foreign artists, including The Beatles, Pink Floyd, Elvis Presley and others, from Yandex.Music, Sound and VK Music. A similar situation, Kommersant’s sources believe, may develop with the foreign catalog of Warner Music.
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