Russian music industry

The music industry of the Russian Federation is divided into several sectors with different characteristics. In 2011, experts at the InterMedia news agency noted that most of the music business in Russia is not taken into account in official state statistics: for example, in the annual report of the Federal State Statistics Service “Socio-Economic Indicators of the Russian Federation,” concert activity is not subject to separate accounting, but is indicated in total “ other communal, social and personal services ” ^[3] . In addition to traditional industries (selling music media, concert activities, etc.), the music business is fundamental or influences other manufacturing industries: the production of mp3 players, the film industry , the media , the gambling business , trade , transport, and even politics and religion ^{[ 7]} . Major sectors of the Russian music industry include: ^[8]

• Concert activity (poster concerts and closed paid events).
• Physical Media Sales
• Digital Sales (Internet and Mobile)
• Revenues of music radio stations
• Contributions to Collective Rights Management Societies
• Other income of copyright holders related to music (advertising and political events, etc.)

19th Century: The Origin of the Music Industry in the Russian Empire

Producer Joseph Prigozhin in his book “Politics: the pinnacle of show business” (2001) compared the first manifestation of the pop market with the popular amusement - skomomoschstvo ^[9] . Legislative regulation of the sphere of pop performances appeared only in 1854, when Nicholas I signed an imperial decree on the introduction of the "Rules on the Establishment of Various Public Entertainments and Popular Funs in the Capitals." According to the document, the exclusive right to hold any variety events in the territory of Moscow and St. Petersburg was transferred to state theaters, which could, at their discretion, transfer it to private individuals ^[10] .

In the 60s of the XIX century, the Russian government tightened the rules of concert activity. After considering the “Cases regarding stage performances in both capitals by private individuals”, on April 2, 1862, Emperor Alexander II secured the monopoly of the imperial theaters on any kind of variety shows. The official notice of the ruler read: “The court minister notifies that by the highest order public stage performances constitute the exclusive right of the imperial theaters, and withdrawal is allowed only in respect of a charitable purpose, but only with the highest permission” ^[11] . At this time in the capitals, the “cafesantan variety stage” was developing - performances aimed at entertaining a rich public and characterized by extravagance. In parallel, gypsy groups that arose in the 30s won great popularity. XIX century and serving the noble society ^[12] .

Along with the concert activity, a music publishing house is developing. In the middle of the XIX century, the first printing enterprises appeared, mass-producing notes . In St. Petersburg, in 1868, a large music publishing house “V. V. Bessel and Co. ”, which produced the works of Rubinstein , Cui , Tchaikovsky , Mussorgsky . The company publishes the magazines Musical Leaflet (1822–1877) and Musical Review (1885–1888) ^[13] .

At the end of the 19th century, the monopoly of state-owned theaters on variety performances was abolished, issued by decree of Alexander III of March 24, 1882. From this moment, market relations begin to dominate in the pop market ^[14] . In 1897, phonographs and phonograph records first appeared in the Russian Empire, and a year later the first catalog of musical records appeared ^[15] .

Beginning of XX Century: Record Development

The beginning of the 20th century in Russia was characterized by the rapid development of the entertainment industry, including the music industry. Music publishing has reached its peak and world-famous Russian publishing houses have appeared, such as the firm of Peter Jurgenson ^[16] . Numerous music note stores are being created, including in Yaroslavl, Rostov-on-Don, Yekaterinburg, Saratov and other cities of the empire ^[16] .

The most developed was the field of recording . In 1902, the first gramophone record factory in the Russian Empire was opened in Riga ^[17] . Simultaneously with the development of the record, the profession of sound engineer appears (the term sound engineer was originally used). The records were recorded by singers, orchestras and choirs, couplets , storytellers, and it was the sound engineers who became the key figure who were responsible for selecting the artists, listening to them and making the decision to sign the contracts ^[18] . The first sound engineer in Russia is considered to be Richard Jacob , who was the first to sell gramophones in Moscow, and later, in 1902, opened a recording studio there. A year later, the record company “Jacob-Record” was founded ^[18] .

The first Russian artist recorded on a phonograph record was Fedor Chaliapin ^[19] . In 1902, the artist sang an aria from the opera Faust and two songs by Pyotr Tchaikovsky in an impromptu studio in one of the rooms of the Continental Hotel ^[18] . Work on the discs began to bring performers constant income and served to popularize their work, especially in the province ^[18] . The specialized journal Gramophone and Phonograph begins to be published ^[18] .

In 1910, the famous Aprelevka Plant opens. The next year, the factory of the Sirena-Record partnership begins work, which released 2 and a half million records in a year ^[17] . Changes are taking place in the legislation and the State Duma in March 1911 adopts the law "On Copyright", which for the first time outlines the interests of record companies. The Musical Rights Agency of Russian Authors (AMPRA) is established ^[17] . In 1911, the Russian Joint-Stock Company of Gramophone (RAOG) was founded, headed by the famous artist Nikolai Figner , who initially reacted negatively to the recording, but later became its active popularizer ^[18] . By 1912, the music industry in Russia was a notable phenomenon. Music stores worked in all cities of the empire, the main record companies had their own studios, and over ten years, sound engineers had accumulated sufficient experience. The largest record companies at that time were “Gramophone”, “Zonophone”, “Jacob-Record”, “Pate”, “Sirena-Record”, “Colombia”, “Metropol-Record”, “Stella-Record”, “RAOG” , “Sound-recording” and “Extraphone” ^[18] .

During this period, unscrupulous producers producing " pirated " records first appeared on the music market. Their production was carried out by Neografon companies, the St. Petersburg branch of the American firm Melodiphon, and the Orfenon partnership ^[17] . By 1915, in Russia there were 6 factories for the production of phonograph records, the annual circulation of which was 20 million copies. Aprelevka factory produced 300 thousand records per year ^[20] . In total, from 1902 to 1917. large firms made more than hundreds of thousands of records, which, according to Alexander Tikhonov , made a cultural revolution, making artists available to the public ^[18] .

1917-1991: the music industry in the USSR

1917-1947

After the 1917 revolution, private initiative in the music business was banned. Publishing is in the hands of the state and in 1922 the music publishing company became part of the State Publishing House on the rights of the music sector. In the 1930s The State Musical Publishing House “Muzgiz” was founded ^[21] . The USSR Music Fund was founded under the Union of Composers , which published works by Soviet authors. Record production is also nationalized and is rapidly declining. In the 1919-1920s. 500 thousand phonograph records were released, most of which were voice recordings. In the mid-20s. the work of old factories is resumed, and in the 30s the All-Union Record House in Moscow begins to work ^[21] .

Concert activity also becomes tightly regulated. The All-Union concert agencies Goskontsert , Soyuzkontsert, Roskontsert are organized, as well as regional branches. Payments of fees for performances are subject to charging. An important role in the concert business began to play ideology ^[22] . Artemy Troitsky in his book “I Will Introduce You to the World of Pop” (2009) wrote that despite the totalitarianism that reigned in the USSR in the 30s, popular music developed actively during this period, a number of famous artists appeared, such as Leonid Utesov , Vadim Kozin , Lyubov Orlova , Klavdiya Shulzhenko , Isabella Yuryeva and others. ^[23]

On February 23, 1923, the history of musical broadcasting began in Russia , when a concert was first played on radio in the USSR. Since 1924, broadcasting has become regular. In the 30s, music was already actively played on the radio, and also developed in the cinema : musical comedies appeared. During the Second World War , the USSR established allied relations with Great Britain and the USA. American ensembles came to the Soviet Union on tour, sold foreign records in stores. American musicals were very popular. With the onset of 1948, friendly relations between the USSR and the West ceased, the Iron Curtain period ensued, and cultural integration received disapproval of power, which was expressed in the prohibition of Western music ^[23] .

1948-1991

In 1957, the All-Union Recording Studio was founded. The production of records begins to revive ^[22] . In the 1960s vocal and instrumental ensembles become popular, their albums diverge in large print runs ^[25] . In 1964, the All-Union Recording Studio “ Melody ” was founded, which became for many years a monopolist in sound recording ^[26] . “Melody” united the all-Union and peripheral recording studios, record-making factories, wholesale trading bases, record-houses, and began to carry out centralized management of creative and industrial enterprises and organizations under its jurisdiction ^[27] . In the first year of the company’s existence, the Aprelevka Plant, the largest in the structure of Melody, mastered the production of flexible phonograph records. These plates were easy to manufacture and more affordable than conventional ones. Flexible records were made for the Krugozor audio magazine, which has been published monthly since 1964, Club and Amateur Performing Arts, and the children's magazine Kolobok. On independent flexible records pop music was produced.

The foreign trade association International Book has become the representative of Melody abroad. Through the mediation of "Interbooks", in 1965 a contract was signed "Melodies" with the German company "Ariola-Eurodisk" ^[28] . The success of sales of Soviet records in Germany became a decisive factor in the signing by the American company Capitol of an exclusive contract with Melody in August 1966. Expectations of sales in the United States came true, and later, in connection with the sale of the 250,000th record of Soviet records, Melodies was awarded the Golden Disc from Capitol ^[29] . By 1970, the circulation of records in the USSR reached 180 million copies ^[20] .

In 1973, the country acceded to the Geneva World Convention on Copyright and the release of licensed records of foreign artists began ^[30] . The sale of records in the USSR was centralized and was carried out through 35 thousand outlets. The most productive were three thousand specialized and company stores, through which 65% of all products were sold ^[30] . Due to strict centralization, great difficulties arose in determining the demand and circulation of new records. “Melody” tried to solve these problems in various ways, but failed to solve it. In 1976, under the “Melody”, a circulation commission was formed, which determined the starting circulation of any record (with the first circulation being 5% of the total). Since no one could predict the final circulation of records, the work of the commission was very subjective. So, for example, Alla Pugacheva’s record, “ Will it still be ?” Came out with an initial circulation of 12 thousand copies, and its final circulation amounted to 2 million 200 thousand.

At the turn of the 60s - 70s, a new format of audio recordings began to develop - a compact cassette . In the USSR, the first tape recorder for a compact cassette appeared in 1969 - “ Desna ”, produced in Kharkov. At the same time, “Melody” arranges the release of the first cassettes.

In the 1980s in the country, in connection with Perestroika , a private initiative re-emerges in the music market and the first cooperatives appear that release their own records. The first of these was the Synthesis company, which put an end to the long-term monopoly Melody ^[31] . In 1987, the release of phonograph records in the USSR amounted to 115 million copies ^[30] . In 1989, “Melody” for the last time reported on the volume of the market for sales of audio products in the USSR, sending a report to IFPI ; according to state-owned enterprises, in 1989, 89.1 million long-playing records and 11 million compact cassettes, as well as 10.4 million singles, were sold in the USSR ^{[31] [32]} . In the same year, a CD production plant was opened for the first time in the country; in 1990, the first ten titles of albums appeared on sale. The first CD released was the album "Ivan the Terrible - Stichira" by Rodion Shchedrin ^[32] . For 1990-1991 Over 150 titles of CDs were released ^[32] .

The music industry in the Russian Federation

1990s

With the collapse of the USSR and the collapse of the socialist economy , the initial stage of the emergence of the modern music market in Russia is associated. In the first years after the formation of the Russian Federation, the music industry was characterized by an unstable situation, however, it was at this time that artists had the opportunity to sell their works without the influence of state censorship ^[33] . Relations in the music business are becoming marketable and many small entrepreneurs are beginning to engage in the sale of audio products ^[33] . By 1994, 74 new music companies were created, with most of them (60) producing exclusively CDs. The largest circulation labels at that time were: SNC, General / Moroz, JSP, RDM, BSA, RECRecords, “Melody”, RCD and “Anima Vox”, “Lad”, “Soyuz”, “Zeko”, “Bekar”, “Image” and “Aprelevka Sound” ^[31] . The distribution market was represented mainly by music stalls and markets, and specialized music stores existed only in a few large cities. The Russian market was similar to the markets of underdeveloped countries ^[31] .

A large share of the market was occupied by pirated products: in the segment of compact cassettes - 95%, in the segment of compact discs - 64%. The first Soviet CD production plant was retrained for the production of pirated records. A significant share of the counterfeit was imports from Bulgaria and China ^[31] . On November 3, 1994, Russia acceded to two major international conventions on copyright - the Bernese and the Geneva (phonographic) ^[31] . In the same year, one of the Big Four majors first entered the Russian market: EMI signed a contract for the distribution of its products with SBA ^[31] . The beginning of the 90s was characterized by the development of private industrial production of audio products. In 1993, a cassette production plant was opened near Yaroslavl, with a design capacity of 30 million audio cassettes per year ^[34] .

At the end of the 1990s, there was an increase in the Russian market of foreign, primarily American, music. In 1998, in Cannes, an agreement was signed between the chairman of the board of directors of MTV Networks Tom Freston and the president of BIZ Enterprises Boris Zosimov on the start of broadcasting of MTV Russia channel in the country. In Russia, specialized music television appears ^[6] .

2000s

2010s

By the mid-2010s The global music market share in Russia amounted to about 1.34%. The total industry, according to analysts, amounted to $ 597 million for 2015, down 8.1% from the previous year. Despite a decrease in concert revenue, total revenue in the music segment, however, showed 4.8% growth, amounting to $ 44.3 million. The segment showed growth due to the development of digital sales ($ 30.4 million, an increase of 11.1 %) ^[35] . The drivers of digital sales growth were: the entry into the iTunes market, the increase in the number of users due to increased access to mobile and broadband Internet, the growing availability of smartphones and the overall increase in the popularity of Internet payments. The main problems: a high level of piracy, lower comparative purchasing power, a complex and confusing system of rights to musical content, high cost of rights to musical content of majors ^[36] .

In 2015-2016, there were changes in the organization of collective collection and payment of royalties. Constantly criticized by the authors for the non-transparency of the society for collective management of rights, it was proposed to transfer it under state control, but later this idea was abandoned ^[37] . However, the largest market players have indicated the need for reform of the system. In August 2015, Russian President Vladimir Putin ordered First Deputy Prime Minister Igor Shuvalov to make the work of societies more transparent. The main problem of the organizations of collective collection of royalties is called opacity in the distribution of remuneration: insufficient control by the state, the presence of conflicts of interest among managers of organizations, non-transparency of methods for distributing remuneration ^[38] .

Concert activity, at the moment, is the most extensive sector of the Russian music business, remaining for many years the main source of income for musicians and authors ^[39] . According to experts, in 2010 the volume of the concert market in Russia amounted to $ 2.1 billion. ^[39] The press noted that the “digital revolution” of recent years has practically destroyed the previous system of sales of physical media, which was reflected in a decrease in the income of musicians and at the same time led to intensification of concert activity. Moreover, the Russian market has long existed according to this scheme, due to the high level of musical piracy ^[40] . Evgeny Safronov, Director General of InterMedia Communication Holding, noted that the specifics of the concert activity is the lack of licensing, which makes it difficult to calculate its volume ^[41] . According to research estimates, pop artists come in half of the concert market, followed by rock performers (29.3%), classical music (9.4%), jazz (6.3%) and colloquial music (5.9% ) ^[42] .

According to experts, in Russia in 2013 there were about 4.5 thousand tour organization companies. Most of them are small companies that employ from 3 to 6 people ^[41] . There are about 10 thousand concert venues in Russia, and half of them are museums. A very large number are occupied by small concert venues and clubs, designed for 100-200 people ^[41] . At the same time, in April 2012 there were about 40 fully functioning functioning concert halls in the Russian Federation, while in the USA their number exceeds 200 ^[43] . The public sector in this segment of the business is minimized and the only large state-owned company for organizing performances is called the Moscow State Philharmonic Society , which organizes a large number of performances by classical musicians across the country ^[41] .

The main problems of the concert business are the high risks and low payback of events, the high performers' fees, the high cost of tickets, corruption, logistics and disproportionate advertising costs ^[40] . In recent years, the number of tours of foreign stars to Russia has increased, although their performances take place mainly in capitals, in which 40-50% of the country's concert market is concentrated ^[41] . The most successful in this regard were performances in 2010 by Rammstein , Metallica and Chris Ri and, especially, the U2 group, to the concert of which 60 thousand tickets were sold in Moscow ^{[40] [44]} .

The positive qualities of the industry include the constant and steady growth of the concert market. In recent years, the segment of ticket operators has been actively developing, of which there are already more than 200 in 2013. According to experts, they act as a market driver, developing ticket payment and delivery systems ^[41] . Promoter and club developer Igor Tonkikh spoke positively about market growth, noting: “In recent years, artist fees have increased almost 10 times. This indicates an increase in the internal quality of the entire market ” ^[41] . Boris Barabanov at the round table “The Concert Market in Russia: You Cannot Be Pardoned” in April 2013 noted that while maintaining the old problems, the concert business had positive aspects in the form of changes in promo sponsors and increasing the activity of concert activities in the regions ^[45] .

At the beginning of 2013, the deputy of the State Duma of the Russian Federation, Alexei Mitrofanov , introduced a bill of amendments to the “Fundamentals of the Russian legislation on culture”, on the basis of which it is proposed to introduce licensing for concert activities. The project was criticized by representatives of the concert market, who negatively considered the proposal to introduce a mandatory bank guarantee in the amount of 150 million rubles for the event organizers, calling this figure unrealistic in today's conditions ^{[42] [46]} .

The release of music albums in Russia is occupied by both record labels and, often, the artists themselves. Anatoly Weizenfeld wrote in the magazine “ Sound Engineer” that the business scheme for producing and selling albums has remained almost unchanged since the popularity of records: the label organizes recording of the album and prints discs in factories, organizes studio or broadcast recordings of musical works, after which a master disk is made, from which a print run is printed at the factory, which then goes to stores ^[47] . Music journalist Guru Ken noted that album production involves a high share of the cost of producing music: the producer company pays the cost of renting a recording studio, session musicians, copyright and related rights, mixing, mastering and indirect costs (PR, advertising, etc.) .) ^[48] . There are several large and small labels releasing albums on the Russian market, including: CD Land Group , Monolith Records , Mystery of Sound , Soyuz Studio , Megalainer, Real Records , S. B. A. / Gala Records ^[48] .

The main carrier on the market in the 90s was compact cassettes , which in the early 2000s began to actively replace the compact disc ^[49] . In the mid-2000s, the Russian market for the sale of music on physical media showed steady growth and in 2007 took the ninth place in the world in volume ^[50] . However, since 2008, in connection with the development of Internet piracy, the market began to rapidly decline (including the pirated physical media sales market) ^[8] . By 2012, there was a catastrophic contraction in the market: according to the American Association of Recording Companies, in 2011 the market shrank by% 30, amounting to $ 76 million in monetary terms. ^[51] In 2012, according to 2M, the decline in retail sales was even more substantial and amounted to 57%. The largest retail chains, including Soyuz, closed or reduced the number of stores. The first ten most successful releases sold a combined circulation of 100 thousand copies, which corresponds to the level of CD sales in the mid-1990s ^[49] . Experts from the International Federation of Phonogram Manufacturers ( IFPI ) noted that despite the potential of Russia to become one of the largest markets for music on media, the situation in this sector is currently deplorable and the country occupies only 23rd place in the world in terms of market size ^[52] .

In Russia, since 2005, the demand for phonograph records has been steadily increasing. If in 2005 they occupied 0.1% of the audio products market in sales (10 thousand copies), then in 2010 the sold circulation amounted to 120 thousand, and the market share increased to 0.32% ^[53] . 2013 was marked by a revival of interest in the production of vinyl records. In 2012, Multimedia Holding founded the company Vinyl Records, which established the production of records in Russia ^[54] . In April 2013, the company "Melody" resumed production of vinyl after a 22-year break. The first batches of records came out in a circulation of 500 pieces ^[55] .

According to a study by InterMedia, by 2014, physical media sales had ceased to play any significant role in the industry. Since 2004, sales have declined 25 times (from 487 billion rubles to 843 million), most specialized retail chains have ceased to exist. According to experts, by 2014 the transition to the consumption of music through digital formats was completed - downloading and streaming ^[56] .

The digital music sales market in Russia is divided into sales via mobile networks (ring back tones, ringtones , etc.) and sales via the Internet. According to the data of the analytical company AC & M-Consulting, since 2011 the level of all types of electronic sales is about 14 billion rubles (about $ 500 million). In 2012, most of them were sales of ring-back tones (11.8 billion rubles), another 2.6 billion rubles. accounted for the sale of other mobile content. 593 million rubles. earned online music services ^[57] . In 2013, sales via the Internet were most actively growing and, according to experts, there was a downward trend in the popularity of mobile sales. For the first half of the year, RuNet services earned 808 million rubles. ^[57] The iTunes Store was named the market leader; Yandex.Music and Trava.ru were also among the three leaders ^[57] .

The head of the Russian Association of Electronic Communications ( RAEC ) Sergey Plugotarenko said that in 2013, music products worth 2 billion rubles were sold in RuNet. Musical content took second place in sales, in the first place were games ^[58] . According to IFPI, in 2014, digital music accounted for 51% of the total revenue of music companies ($ 36.8 million in monetary terms). By formats, a large share of the digital market was mobile music - $ 10.7 million. Further: sales of individual tracks - $ 8.3 million, album sales - $ 6 million, subscription music - $ 5.9 million, music for advertising - $ 4.5 million, otherwise - $ 1.2 million ^[59] .

By 2017, paid subscription services have gained a lot of development. Back in 2016, Russia became the fifth subscriber market for Apple Music , after the United States, Britain, Japan and Canada ^[60] . In 2017, Apple Music (600 thousand) took the first place in terms of the number of subscribers among paid services in the Russian Federation, the second - Yandex. Music (250 thousand), the third - Google Play Music (100 thousand). It is estimated that the presented services earn by subscription about 2.4 billion rubles a year ($ 34 million) ^[61] .

The Russian market for musical instruments and equipment is one of the largest in Europe. According to estimates, its volume is $ 450 million and is characterized by high growth - about 20-30% per year. The target audience in recent years has grown from 1% to 3-4% of the total population of the country. The largest companies, suppliers of musical equipment include: Arsenal Music, Artimusic, Dynatone, InSide, MixArt, Roland Music, SMS pro, Yamaha Music Russia ^[62] .

The structure of the assortment is divided into two large segments: contract (sale of stationary equipment for entertainment complexes) and retail . The basis of sales in music stores are guitars and accessories. In Russia, they account for 35-40% of sales. Further, microphones , drums and keyboards occupy 10-12% each . Seasonality is characteristic of this market: in the New Year’s time, demand for lighting and sound equipment is growing, in summer for acoustic guitars, and in September for electric guitars ^[62] .

In recent years, there has been a growing demand for electronic musical equipment: electronic drums and DJ equipment. There is a noticeable difference in the market in large million-plus cities and regions: in large cities there is a greater demand for expensive equipment and tools. The largest retail chains are MuzTorg, Dinaton, Accord, and Musical Arsenal, which occupy 50% of the market. Actively developing online stores ^[62] . There are about 170 music stores in Moscow, and 70 in St. Petersburg. The share of Russian products in sales is insignificant. Most of the instruments are imported from other countries: the import volume in 2015 amounted to $ 52.36 million, the share of export of Russian manufacturers - $ 0.64 million ^[63] .

The production of musical instruments in Russia is currently carried out by small enterprises. In the Soviet period, there were large manufacturing plants: The Musical Instrument Factory named after A. V. Lunacharsky (St. Petersburg), keyboard factory “Red October” (St. Petersburg), Wind musical instrument factory (St. Petersburg), musical instrument factory “Lira” (Moscow), piano factory “AKKORD” ( Kaluga) and others ^[64] .

In the 1990s, most factories were closed and today the country has not survived the production of serial production of pianos, pianos, wind instruments (except for folk), drum sets, violins and violas. At the moment, according to the Ministry of Industry and Trade, 48 organizations of small and medium-sized businesses are engaged in the production of musical instruments. 25 of them specialize in the production of folk instruments: accordions, button accordions, accordions, balalaika, domr, etc. ^[64]

In general, it is noted that the music industry is in decline. So, the composer and cellist Yaroslav Sudzilovsky believes that “Soviet factories did not produce brilliant, but reliable tools, but now there are no sufficient production capacities to speak of the existence of industry in Russia. For training, instruments made in China are used, and for performances, musicians buy instruments from homeworkers whose names are already in vain ” ^[64] .

Russia in the ranking of the value of global retail markets for audio products

CD and Audio Sales

Digital Sales

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