Two popular Internet resources plan to create premium services for listening to music. The information about such initiative appeared recently. While VKontakte made a formal announcement of their intentions, users found out about the plans of YouTube from mass media. The company has not yet made any official comments on the news. It is reported that the program will be “tuned” specifically for mobile devices. The emergence of the service must resolve the conflict that arose between YouTube and record companies that are not satisfied with low income from one of the most popular websites.
RBCdaily reported that the CEO of VKontakte Pavel Durov spoke about the willingness of the company to earn money on music at the GMIC Conference in Silicon Valley, California. Later the spokesman of the social network Georgy Lobushkin had to reassure users. According to him, this does not mean the introduction of online access to VKontakte music library, instead the developers plan to create a new, additional service. Besides, nobody is going to limit users in uploading their own audio tracks. The representatives of the social network said that they are conducting negotiations on cooperation with all the major music labels. Warner Music Group, Universal Music, and Sony Music Entertainment have already confirmed that they are in such talks.
The practice of providing unlimited access to music content for a small fee is widespread in the global network. Such services are provided by resources like Rdio, Rhapsody, and Spotify. There is a similar Google product, which is owned by YouTube. The largest service of legal audio content in the Russian market is “Yandex.Music.”
Ihnat Berezhny, director of the Music Industry Association of Ukraine commented on the news: “What concerns the initiative coming from VKontakte, which has been criticized for many years for placing illegal materials, in my opinion, it is the result of the new ‘anti-piracy’ law that took effect in Russia on August 1. It provides for specific actions to block sites that provide access to illegal video content. Now the music companies are making significant efforts to make this law applicable to audio content as well. Despite all the criticism, similar initiatives, for example introduction of content filters on Odnoklassniki and VKontakte, demonstrate the effectiveness of this law. Market operators in Russia begin to realize that it is no longer possible to build a serious business based on ‘piracy.’ At the same time, as far as I know, nobody knows yet what model of monetization of musical production will be used by VKontakte. In my opinion, the best option would be a business model freemium. The idea of this model is such that a user has choice – whether he wants to listen to music for free but with advertising and certain limitations on the amount of content or he would rather pay for unlimited access. The fee might be about 10 euro per month in Europe and 10 to 15 dollars in the US. Thus, you either pay with your money or with your time. I am convinced that in Ukraine, despite the presence of large amounts of music content that is freely available, paid services have good prospects. The situation with copyright and intellectual property in this country hasn’t been criticized only by the lazy: both the US and the EU have repeatedly raised this topic, also in connection with the signing of the Association Agreement. State Intellectual Property Service of Ukraine is drafting a bill. Recent re-subordination of this agency to the Ministry of Economic Development and Trade was meant to facilitate the process of finding a solution to the issue – I would predict that we will soon see its final version. I can’t say whether the new law would be stricter than the Russian one, but in any case, it will be an important signal for illegal resources. Accordingly, the prospects of paid services will be much better. There are already a few on-line movie theaters, who can compete with ‘pirates’ that operate in Ukraine. The potential of legal content on the music front is not just as good. Of course, not only the record companies, but also the musicians benefit from such projects.”
