The IFPI has said that Russian social network vKontakte is “choking” the country’s music market, but that it now has the opportunity to become a powerful legitimate service.
The global trade body’s CEO Frances Moore spoke following a report from the US Trade Representative, which includes vKontakte in its list of “notorious markets” for the fourth year running.
Moore suggested that the controversial platform - which “uses unlicensed music to attract viewers and generate substantial revenues from providing access to copyright-infringing music” - is a key reason why Russia’s music business languishes at No.23 in global rankings when it “could easily rank among the world’s Top 10”.
The latest US Trade Representative report is “a respected barometer for copyright in countries around the world” and not good news for vKontakte, according to Moore.
But “this is an ideal moment for action” from the Russian portal, she added.
“vKontakte is undergoing significant management changes at the moment. Its founder and former shareholder, Pavel Durov, has sold his stake and control is shifting over to the majority shareholders led by Alisher Usmanov,” Moore explained. “Press reports speculate on a change of strategy and eventually an IPO on the stock exchange. It appears that vKontakte is eyeing financial investment outside Russia, with all the scrutiny that that will entail. Any company in that position will need to convince investors it has credible long-term growth potential. Showing a serious respect of copyright and being a licensed partner of the music industry will be an important part of that exercise.
“vKontakte should not wait for an IPO to seize this opportunity. It should act now, take steps to stop facilitating piracy and become a licensed participant in the music business,” Moore added. “Working with record companies vKontakte could be a powerful player in a fast-growing licensed Russian music sector. This does not need to mean that consumers would be deprived of free music - there are already licensed free streaming services such as Yandex and Trava. What it does mean is stopping unlicensed music, so that artists and record labels have the choice of how their music is distributed and get paid a fair return as a result.”