Spotify, one of the world’s biggest music streaming services, has cancelled its plan to launch in Russia. BBC Russia reports today that the Swedish company has taken a dramatic U-turn and dismissed the would-be head of the country’s division, Alexander Kubaneishvili.
Kubaneishvili announced the news in a letter to partners, Russian news service RBC writes. In it, the businessman mentions his “regret” and explains that Spotify has now “refused to launch in the foreseeable future”. He adds that “the economic crisis, the political situation, the new laws governing the internet” are the main causes for the decision.
RBC also writes that Kubaneishvili notes that “he does not work in the company”, seemingly severing all links with Spotify. It looks like Russia isn’t going to get Spotify any time soon.
The Russian market had been preparing for its own Spotify arm, registered “Spotify,” since January last year. RBC says a deal with Russian partners established a private company with limited liability to Spotify AB (its Swedish home) and the division was touted by Russian media for launch in early 2015. Previously, the company told Tass that Russia’s problems would not mar the move.
Spotify would have operated in the same way as Spotify elsewhere, now represented in 58 countries around the world. A Russian Spotify subscription was going to cost 500 rubles, around £5 a month.
But Russia is unstable. As Kubaneishvili cites, the country’s uncertain political and economic future has prompted Spotify to decide against the expansion. There’s the ongoing situation with Ukraine; the spiralling decline of its currency, the Ruble; and, probably most important of all, the fact the internet is blighted by government meddling.
The problem of music piracy is also likely to have played a part in the cancellation of Spotify’s Russian launch. In the past, music labels have claimed that Russian social network vKontakte is a “haven” for illegal downloads and has in the past “deliberately promoted” large-scale piracy. Arstechnica says three major labels, Sony Music Russia, Universal Music Russia, and Warner Music UK, filed copyright suits in April 2014 against the website.
The Guardian reported in April 2014 that figures showed Russian recorded music revenues were just 2.2 billion Rubles in 2013, which put it outside the top 20 countries global rankings of spending.
Spotify told us that the company isn’t officially commenting on the situation. However, a spokeswoman did suggest that the reasons speculated, including recent legislation which makes it difficult for non-Russian-owned companies to launch in Russia, have had a significant impact.
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