Warner Music’s arm seeks Russian deals despite suspension | music industry

The Guardian has learned that executives at Russia’s Warner Music, home to artists including Ed Sheeran and Dua Lipa, and France’s Believe, have continued to try to broker deals despite work being suspended after the invasion of Ukraine.

The $15 billion (£13 billion) listed company Warner Music – owned by Sir Leonard Blavatnik, a Ukrainian-born billionaire with dual US and British citizenship – owns ADA Russia, which works with local independent companies and artists such as Zemfira and Gorky Park. Extensive ADA Operations Lists Artists including YouTuber and rapper KSI as clients.

A marketing email sent by a senior executive at ADA Russia, which is located within the offices of Warner Music and its employees who have Warner Music email addresses, attempted to mobilize business with local labels nearly a month after the parent company announced it was suspending all operations in Russia in March.

The email, sent in April and seen by the Guardian, sought to discuss a “potential collaboration,” offering premium prices for a range of music services and citing a string of Russian artists the company already represents.

“I would note that our streaming rates are much higher, we can also do vinyl releases, and we provide advanced analytics,” the executive said in the email. “Everything is ready, and we would like to show it in examples. We would like to meet with you and discuss in person all the opportunities and our possible cooperation.”

The division, which calls itself the distribution division of Warner Music Russia, does not work with world-famous artists who have signed the third largest record company in the world.

The email directly contradicted Warner Music Group’s March 10 announcement that it was Suspension of operations in Russiaincluding project investments and development, promotional and marketing activities and the manufacture of all physical products” after the invasion of Ukraine in February.

A spokesperson for Warner Music Group confirmed that the CEO should not have been doing business in Russia and said he had launched an investigation.

“We suspended our operations in Russia in March,” he said. “This email is over five months old, but it should not have been sent. We are investigating what happened and have also reiterated our suspension rules to our local team.”

Despite the music CEO’s offense, the Russian company is not believed to be operating in violation of Warner Music’s rules on a daily basis.

However, the French music group Believe, which has worked with artists including Slayer and La Roux, continues to operate in Russia on a larger scale including making payments to the local broadcasting service that was until recently owned by the country’s largest lender, Sberbank, It is on the UK, EU and US sanctions lists.

After the invasion of Ukraine, one of France’s biggest tech companies, Believe, valued at more than €800m (£702m) on the Paris Stock Exchange, has been advising Russian partners on how to continue to weather the sanctions, while also saying It is still complete. Compliance with international sanctions.

Following the Guardian investigation, the company said it had halted new hiring and investment in Russia and suspended activities including releasing music from independent artists who use its services, as well as terminating relationships with local brands and artists it works with directly under international sanctions.

However, it turns out that Denis Gorshkov, managing director of the Believe’s Russia operation, continues to try to sign deals with artists and for new catalogs.

One email, seen by the Guardian, includes a follow-up to a €3m ‘new offer’ with a Russian label to ‘monetize new issues and back catalog’.

The company said this did not break a pledge it made in March because it is a new deal with an existing partner, not a new investment in Russia.

A Believe spokesperson said: “Believe has pledged peace and has made the choice to continue to work with its local clients, artists and partners in the Russian market in compliance with all applicable laws and regulations.” “Believe maintains all of its operations in Russia in order to support artists and brands, protect the safety of its people as well as ensure access to music production and distribution. Believe’s mission has always remained to protect the creativity, artists, and musicians around the world, and to support both bands and individuals.”

Believe – which was founded in 2005, launched in the UK in 2010 and launched at Euronext last year – has continued to hire staff for roles including brand manager and creative producer.

A Believe spokesperson said the new hires will replace normal employee turnover and do not represent an expansion of its Russian operation.

A financial report on the activity of a Russian artist with Believe, seen by The Guardian, shows that he is doing business with local broadcasting service SberZvuk, which until recently was owned by the state-controlled company Sberbank.

In May, Sberbank, which Got Streaming Service in 2020 To create a competitor for Apple Music, Spotify and a local competitor Yandex, It sold its stake as part of a broader divestment process of positions in Russian technology companies after the invasion.

A month later, the UK also added the new owner of the streaming service, JSC New Opportunities, To the list of companies subject to sanctions Indicating that the deal with Sberbank means that it “is engaged in obtaining interest from or support from the Government of Russia by doing business in a sector of strategic importance, namely, the Russian information, communications and digital technologies sector.”

JSC New Opportunities, the new owner of Zvuk, has not been sanctioned by the European Union.

“Believe confirms that its evaluation has concluded that Zvuk has never been subject to EU, nor US sanctions in relation to Believe’s activities,” the company said. “If at any point Zvuk is subject to EU and/or US sanctions, Believe will immediately withdraw all of its catalog from this platform and terminate any kind of partnership.”

The company owns brands including New York-based music distribution platform TuneCore and in 2018 bought a controlling stake in Germany’s Nuclear Blast, one of the biggest brands in rock and metal. Home to acts including Slayer, Sepultura, and Machinehead.

Other music labels listed on the Believe Brands page include: Allpoints France, who worked with Bjork; AFM records, which has anvil And the pink In his list and naive, the home of French business M 83 And the Youssou N’Dour.

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