Spotify no longer earns any money from Russia (or passes it on to music partners)

Several media giants have responded to Russia’s invasion of Ukraine over the past few days by shutting down their services in the country.

Netflix shut down its platform in Russia last week. Applemeanwhile, yes Stop all sales of products on the market and suspend advertising on its app store there.

Such moves have inspired a fair conversation about the music rights business’s biggest income provider – Spotify – and whether it should block access to its services in Russia.

So far, Spotify doesn’t do that: they’re maintaining a near-full service in the territory (apart from delete content from Kremlin-backed media).

However, here is some important news: SPOT has confirmed in the last 24 hours that it To be suspend any monetization – whether from subscriptions or advertising – in the territory.

What this means in practice: Spotify won’t take a dime more from Russian subscribers or advertisers for the foreseeable future – or in fact pass that money on to its music business partners.

This is perhaps a decision made with the backing of Spotify’s biggest stakeholders (and the biggest recipients of its money): Universal Music Group, Sony Music Group, Warner Music Groupand Merlin.

UPDATE: All of the above is true: Spotify doesn’t take any money out of Russia and so obviously doesn’t pass on that (non-existent) money to music copyright holders. However, one important thing needs to be clarified: A Spotify spokesperson told MBW: “Spotify continues to pay copyright holders for music streams in Russia.” In other words, Spotify is subsidizing royalties will come from subscribers in Russia and pay firms and publishers. In other words: Spotify bears the full cost of disabling its service in Russia, and does not impose a financial burden on its music partners.

Spotify’s Chief Financial Officer, Paul Vogel, confirmed the news at the 2022 Morgan Stanley Technology, Media and Telecommunications Conference on Wednesday (March 9).

Vogel told Morgan Stanley interviewer Ben Swinburne: “[Spotify has] cut all monetization in Russia, so coming soon there will be no ads and no premium revenue in Russia.”

Vogel’s update follows Spotify notification last week that it would close its offices in Russia “indefinitely”, but that it plans to keep its service “operating in Russia to enable the global flow of information”.

“[Spotify has] cut all monetization in Russia, so coming soon there will be no ads and no premium revenue in Russia.”

Paul Vogel, Spotify

Many major music companies have now followed suit with office closures and other business management measures in Russia.

On Tuesday (March 8) Universal Music Group confirm it has suspended its business on the market.

Today (March 10), both Warner Music Group and Sony Music Group revealed, within an hour of each other, that their respective activities had also been suspended in Russia.

In a statement released today (March 10), Sony Music Group, said: “Sony Music Group calls for peace in Ukraine and an end to violence. We have suspended our operations in Russia and will continue to support global humanitarian efforts to provide relief to victims in need.”

In a separate statement issued today, a spokesperson for Warner Music Group said: “Warner Music Group is temporarily suspending operations in Russia, including investment and development projects, advertising activities. and marketing and manufacturing all actual products.

“We will continue to fulfill our agreed obligations towards our people, artists and musicians as best we can as the situation unfolds.

“We remain committed to supporting humanitarian relief efforts in the region.”

All three majors have also donated to organizations focused on the Ukrainian people.

As for Spotify, Paul Vogel yesterday reiterated that the service will continue to operate in Russia, citing the information flow, but stressed that Spotify will not “charge […] premium users”.

Vogel explained that Spotify expects to lose about 1.5 million Premium subscribers in Q1 due to its actions in the market.

With the Russian invasion of Ukraine, we have decided to withdraw all our staff, Vogel explains [out] of Russia and we no longer charge premium users in Russia.

“So the premium users that we have in Russia will stop working. Most of them in Q1 [and] a little bit in Q2. We predict there will probably be around 1.5 million users exiting the subscription business [as a result]. ”

Spotify Guide for its services globally in Q1 2022 including 418 million MAU, 183 million Premium subscribers and Total Revenue of €2.60 billion.

Spotify launched in Russia in July 2020 and the country has a settleable population for the platform around 144 million people.

Diversity report where that country represents less than 1% of Spotify’s total revenue.

Elsewhere in the music business, Living country announced that it will not do business in/with Russia, Netflix close the door such as its platform in Russia last week, while Apple has stop all product sales in the market and ban advertise on its app store there.

This week also saw the UK’s collectors’ association PRS for Music, representing the rights of more than 160,000 musicians/composers and Music publishers around the world officially suspended its rights representation agreement with its Russia-based partner, the Russian Authors’ Association RAO.

Yesterday (March 9), Sony indicates that sales of Playstation consoles will be paused in Russia, while game giant Nintendo announced the same.

In the past two weeks, more than 300 multinational companies boycotted the Russian market to protest its military action in Ukraine.

Some of those companies include Mastercard, Visa, AppleIkea and Samsung, Coca Cola and McDonalds.

At the end of Q4 2021 (ending December 31), SpotifyThe global Paid Subscriber base is 180 million, an increase of 8 million subscribers (5%) on the 172 million the company counted at the end of last quarter (Q3 2021).

Meanwhile, the company’s total global monthly active users (MAUs) grew 18% year-on-year to 406 million in Q4 2021 and up 7% QoQ (Q3 ) when the platform hit 381 million MAU.Worldwide music business Spotify no longer earns any money from Russia (or passes it on to music partners)

Fry Electronics Team

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