Spotify expanding to Russia after failed attempt?

Streaming giant Spotify may join troubled Australian service Guvera and competitor Apple Music in Russia, according to reports.

Spotify included Russia among its now 59 global markets last year. It registered the company in the territory in 2014 but closed its office without an official launch in February 2015, laying off its head Alexander Kubaneishvili. 

While an official reason for its closure wasn’t given, a report by Russian news publication RBC quoted a letter penned by Kubanieshvili to potential partners. It read (translated): "There are several reasons - the economic crisis, the political situation, the new laws governing the Internet."

Those new personal-data laws, which came into effect last September, meant that the data of Russia’s people could only be stored in Russia – an obvious problem for Spotify, which is a cloud service. 

Now, according to Moscow-based newspaper Vedomosti, Spotify is considering a second entrance into Russia. Sources at Russian labels and media companies have allegedly told the paper Spotify now sees Russia as a major music market with potential. Spotify has declined to comment on the report.

With the 9th largest population in the world, Russia does have large growth potential. It’s currently 59th in the world for digital music sales and only ended the reign of its physical format era in 2014; however, its local music services Zvooq (funded by retailer Ulmart) and Yandex.Music (the music arm of the country’s own Google, Yandex) are growing. What’s more, PwC has reported that Russia’s digital music market grew by 11% in the past year to $30.4 million.

As the second biggest source of digital music revenue for labels in Europe, and with more than 35 million active paying users globally, Spotify is the world’s streaming leader, adding around 2 million subscribers a month. Adding to the argument a Russia launch is likely, Spotify has been rigid in its global growth strategy in 2016. This year alone it has launched in Indonesia and is expected to expand to Japan also.