Believe CEO Denies Company Is Trying to Grab Market Share in Russia
Written by djfrosty on May 11, 2023
LONDON — Russia’s invasion of Ukraine in February 2022 led to a rapid exodus of global music companies from Russia. All three major labels say they ceased operations there. So did touring giant Live Nation and streaming platforms Spotify, TikTok, Deezer and Amazon Music. Paris-headquartered Believe, however, publicly pursued a different path, and a year later is still operating in Russia — releasing, distributing and promoting new music by local artists and labels on Russian streaming platforms Yandex. Plus, VK Music and Zvuk.
Executives at rival music companies have privately expressed outrage, accusing Believe of exploiting the sudden breakup of Russia’s music market — the 13th largest in 2021, generating $328 million in revenue that year, according to IFPI — to gain market share in the absence of Western competitors.
Denis Ladegaillerie, Believe’s founder and CEO, denies that charge and says the major labels and platforms are being hypocritical for criticizing how the French company is operating in Russia. Believe’s ongoing presence in the country “is really not an economic decision,” he tells Billboard in a rare interview addressing the issue. “We are not looking at building or growing or extracting value [in Russia].”
Following the start of hostilities, Universal Music Group, Sony Music Entertainment and Warner Music Group said they stopped distributing and promoting new releases in Russia. If new titles are being made available on local streaming services, the majors say, it’s through piracy.
The Believe CEO is skeptical about those assertions and defends his company’s continued presence in the isolated nation. “What I see is that all global artists are still available on all local platforms [in Russia],” Ladegaillerie says, noting that YouTube and Apple Music are also still active in the market, albeit in a reduced capacity. “So, my question is: ‘You’ve pulled out of Russia? Really?’”
After Billboard discovered in December that Russian streaming service VK was allowing users to upload albums from major label artists like Taylor Swift (UMG’s Republic Records) and Red Hot Chili Peppers (Warner Music), all three major labels declined to comment; labels body IFPI did not condemn the apparent copyright violations, nor confirm if they or its label members had issued takedown orders to VK.
Ladegaillerie says Believe, for its part, has “very strictly” abided by all international sanctions placed against Russia since the start of the war — “both in law and spirit” — and has halted all new investments in the now-isolated country. “Our No. 1 priority, both in Russia and Ukraine, has been to protect our teams locally and support our artists,” he says.
Despite those claims, Believe’s revenue from Russia, where it retains just over 40 employees, has been growing. Combined revenue from Russia and Ukraine rose 9.9% to 57 million euros ($62.5 million) in 2022, according to the company’s year-end financial figures. (That was 7.5% of Believe’s overall revenue.)
While the economic sanctions against Russia were meant to starve the country of funds and further isolate it from the world financial system, they have been limited in scope and hundreds of Western companies continue to operate in the country. Global music companies have not completely extracted themselves from the country, either. Universal Music and Warner Music — which had the largest presence in Russia among the majors, with almost 100 employees — continue to pay their staff and maintain offices there, although they say those offices have been effectively closed since the war started.
In September, Sony Music announced it had decided “to exit the Russian marketplace completely” and was transferring its Sony Music entity there to a fully independent local company that would only represent locally signed artists. “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,” Sony Music said in a statement at the time.
YouTube continues to operate in Russia in compliance with U.S. sanctions but has suspended ads and monetization features (Russian creators can still make money from ads and other monetization products shown to users outside of the country). The Russian subsidiary of YouTube parent company Google filed for bankruptcy last year after authorities seized its bank account, making it impossible to pay employees, suppliers and vendors, a YouTube spokesperson tells Billboard.
Apple Music is still available in Russia, although there are fewer subscription payment options, as MasterCard and Visa cards issued by Russian banks can no longer be used to pay for subscriptions. Music from the major labels that left Russia is not available. (An Apple Music spokesperson did not reply to a request for comment.)
The French government of President Emmanuel Macron, for its part, has supported Believe’s decision to “maintain links” with Russia, Ladegaillerie says. That rings true for other French companies, which established deep ties with Russia in the wake of the Cold War. In March, French retailer Auchan said it planned to open a new store in Russia, doubling down on its brick-and-mortar presence in the market. And auto maker Renault, which is 15%-owned by the French state, has been scrambling to restart its assembly lines in Russia, where it owns the country’s biggest car maker, The Wall Street Journal reported.
In fact, French companies are among Russia’s biggest foreign employers, providing more than 150,000 jobs across a range of sectors that include energy, food products and wholesaling, according to figures from the French Economy Ministry.
The situation “is not black and white, it’s grey,” Ladegaillerie says. He identifies Believe’s humanitarian support for Ukraine — which includes donations and regularly publishing a playlist of Ukrainian artists — as part of the “difficult” balance his company is trying to maintain in Eastern Europe. “We realized that different countries have different perspectives on the situation but that’s really the line that we are trying to navigate.”
Additional Reporting By Vladimir Kozlov