Russian music startup Zvooq raises $20 million ahead of Spotify’s arrival, but its real enemy is piracy

Russian digital music streaming service provider Zvooq is today announcing a $20 million Series A financing round led by online retail giant Ulmart, with participation from Helsinki-based private equity firm Essedel Capital.

The news comes as Spotify is reportedly gearing up to launch its music subscription service in Russia in the coming months.

Zvooq offers fully-licensed music services with a catalog of over 15 million songs from over 500,000 artists and and 25,000 labels today. A spokesperson likens Zvooq to a combination of Spotify and iTunes, however, as users are able to stream tracks for free and subscribe for ad-free access, but also to purchase songs and albums à la carte.

Zvooq — новый формат музыки

Russia is known to host many sites offering copyrighted media (including music) free of charge, so getting Russians to pay for access to content is a challenge on its own even without massive competitors such as Spotify looking to enter the market.

Since 2000, Russia has been a mainstay on the USTR’s “Priority Watch List” in its Special 301 Report, backed by industry claims of billions of dollars lost by US companies in wide-scale software, music and film piracy. Many Russian consumers are simply too used to not paying for media that it has become a ridiculously hard trend to buck (and a headache for owners of copyrighted works).

In its 2013 report, IFPI noted that Russia could be a top 10 market globally (rather than the world’s 23rd largest market today) if it were able to create an effective environment for copyright enforcement.

Zvooq, however, prides itself on already making legal music streaming “easier than piracy”, offering a freemium streaming solution that allows telecommunication companies, device manufacturers, online retailers and social networks to integrate its service into their own.

Coincidentally, one of Russia’s biggest social networks, VKontakte, has very recently come under massive legal fire from major record labels who claim that it has done far too little to stop its users from sharing and enjoying pirated music at large scale, and that it was even “designed for copyright infringement on a large scale” according to IFPI chief exec Frances Moore.

One of the startup’s founders, Victor Frumkin, says Zvooq is ‘the first real alternative to piracy in emerging markets’, even going as far as claiming that the company is “bringing order to the chaos of the Russian music market”. Time will tell, as Bob Marley used to sing.

For Zvooq, Russia is however not the end game, we should note. Currently available in Ukraine and a host of CIS countries including Belarus, Armenia and Kazakhstan, the fresh capital will also be used to roll out the Zvooq suite of services in other “developing world territories”.

Featured image credit: bikeriderlondon / Shutterstock

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