Sony Music Group has completely exited its Russian operations as the war between the country and Ukraine continues.
The move arrives six months after the major music company decided to suspend its operations in Russia in response to the global condemnation against the Kremlin and its president, Vladimir Putin.
Sony Music has “made the decision to exit the Russian marketplace completely and transfer the Russian company and its local roster to local management,” the company said in a statement obtained by Billboard on Wednesday (September 7).
“As the war continues to have a devastating humanitarian impact in Ukraine, and sanctions on Russia continue to increase, we can no longer maintain a presence in Russia, effective immediately,” the company added.
Sony Music Russia reportedly had about 40 to 50 staff based in Russia, working with the company’s record label and its indie distribution arm The Orchard.
Now, Sony Music has decided to completely abandon the Russian market, with its former Managing Director for Russia, Arina Dmitrieva, setting up a local independent company to assume control of Sony Music’s Russian label interests, sources told Billboard.
This new firm is a completely independent and separate entity from Sony Music, and has already been registered with the Federal Tax Service of Russia on Aug. 25, Billboard said, citing government records and a source familiar with the decision.
Dmitrieva’s company will now represent Sony Music’s locally signed artists in Russia, while international acts formerly distributed by Sony Music Russia are excluded from the transfer.
Billboard reported that Sony Music Russia’s staff will likely be offered jobs under the new independent label.
Since suspending operations in Russia in March, the company and its rivals Universal Music Group and Warner Music Group have continued to provide financial support to their staff in Russia, while still maintaining offices in the country.
However, all other investments, promotional activities, manufacturing and new releases have been halted.
“As the war continues to have a devastating humanitarian impact in Ukraine, and sanctions on Russia continue to increase, we can no longer maintain a presence in Russia… [Sony Music] has made the decision to exit the Russian marketplace completely and transfer the Russian company and its local roster to local management.”
Sony Music Group
Before the Ukraine war, Dmitrieva was bullish on the Russian music market, telling IFPI in its Global Music Report for 2021 that “there has never been a better time or brighter future for Russia’s music market.”
But now, the conflict could upend the Russian music industry that became the world’s 13th-largest music market (according to IFPI data) before the war broke out.
The music industry in Russia generated $328 million in revenue in 2021, up 58% year over year.
That could change as major labels have suspended their operations in the country, while streaming services like Spotify pulled out of the market and international artists cancelled their touring in the country.
Dmitrieva said in IFPI’s 2021 report: “If you look at the charts of various streaming services, they’re heavily dominated by local artists; in some charts it’s up to 90% of the chart.
“The Russian audience wants to listen to Russian music, so we have to be active when it comes to finding young talent, helping them develop and connecting them with that audience.”Music Business Worldwide