Gala Records, Russia’s first private music record label, has withdrawn six legal claims it earlier advanced against Mail.ru Group for alleged rights infringement and instead inked a license agreement with the leading Russian Internet company, the Russian business daily Vedomosti reported on Monday, citing direct exchanges with the two companies’ spokespersons.
Under the terms of the agreement, Mail.ru Group commits itself to indemnity payments to Gala Records for free streaming-based run-throughs of proprietary tracks by users of Moi Mir and Odnoklassniki, two social networking sites owned by the group. Users will also be able to download music for $0.60 per track, and Mail.ru Group will be obligated to deduct a yet-unspecified amount for Gala.
With Gala’s endorsement, Mail.ru Group can now run 500 music tracks on a completely legal basis, according to a spokesperson for the group. The agreement is part of a “broad experiment in which a ‘free-to-play’ model is being tested,” with users being charged for extra features.
The settlement sets a precedent for the Russian Internet. Another record label, Universal Music Russia, is already in talks with Mail’s Odnoklassniki over a similar deal, Universal Music Russia CEO Dmitry Konnov told Vedomosti.
According to Mail.ru Group Vice President Ilya Shirokov, more than 50% of Odnoklassniki’s revenue comes from extra pay services, and users are ready to pay for downloading legal music. Some other players are not so sure. Boris Golikov, the founder of online store Fidel.ru, doubts users’ willingness to pay when much free downloadable music remains readily available on other sites. Gala Records is primarily after tens of thousands of dollars per month in indemnities, Golikov believes, and Mail.ru Group simply wants to legalize some user-uploaded content.
Indeed, most Russian Internet users still opt not to pay for content. In 2011, Gala Records litigated over copyright infringements with Russia’s leading social network, VKontakte. In literature sales, moreover, the situation is as bleak as in video and music: up to 90% of all e-book downloads in Russia are illicit copies.
