The popular Russian social media site VKontakte (VK) has in the past been branded as a facilitator of Internet piracy, in a new deal signed between VK's owner, Mail.ru, and Universal Music Group (UMG), the site's reputation is set to change. Mail.ru has already signed deals with other music labels including Warner and Sony Music. The new deal will allow music owned by UMG to appear on the social networking site legitimately.
Regarding the deal, VK CEO, Boris Dobrodeyev said:
“Following extensive negotiations, we have agreed terms with all of the major music rights holders, enabling us to draw a line under this process. This is a historic moment and a new milestone in Vkontakte's history. Our constructive and mutually beneficial collaboration has put an end to earlier disputes with the record companies. Following the removal of legal barriers, we can now create new products based on VKontakte's music service that users will value.”
Senior Vice President of UMG, Adrian Cheesley, had the following to say about the deal:
“Music has tremendous value and we're gratified to reach a commercial agreement that ensures UMG's artists are fairly compensated for the use of their music. Russia is an important, and growing, market for UMG and with this important step we're looking forward to developing more local artists, investing in growing the music scene and broadly licensing services.”
VK now has 350 million users but it hasn't really taken off outside of former Soviet countries. For those not on the site, a simple search for a band or singer will bring up most of their songs, which you can play on the fly or download directly. With the details of the deal being scarce, it is unclear how it will alter the easy availability of the music currently available on the site.
What we do know about the deal is that Mail.ru will test various monetization models “jointly with other market players” to find a solution which works for musicians and listeners. Insiders close to the negotiations have said Mail.ru has given UMG a “minimum guarantee” that it will receive around $8 million over the next three years.