26.07.2024
14 min
2018
The article examines how Russian artists end up in the top of Ukrainian streaming services and what financial flows are behind this. The article explains how the share of Russian music on different platforms is formed, which artists appear in the charts and what this means for tax revenues in the Russian Federation. It also examines the models of work of Russian labels, their impact on the distribution of income and the role of international companies in this.
The research examined the top 100 most popular music streaming services in Ukraine, including:
Youtube Music (Feb 24 – Mar 2, 2023)
Apple Music (Mar 6, 2023)
Spotify (Feb 24 – Mar 02, 2023)
Deezer (Mar 6, 2023).
Youtube Music and Spotify publish track chart updates weekly, while Apple Music and Deezer update rankings daily.
Among the streaming platforms studied, only two had Russian tracks in the top 10:
Among Russian artists, the singer Instasamka has the most tracks in the top 100 of the four streaming services – 8. She is the only Russian artist to appear on three of the four platforms at once.
On Spotify, Instasamka and rapper Big Baby Tape remain the most popular Russian artists, as each of them has three songs in the top 100. The top three also include Ukrainian singer Anna Asti, who currently works in the Russian Federation. Another Ukrainian is also on the list – singer and blogger Xolidayboy. In an interview for Grazia, he noted that he was born in Sevastopol, has Ukrainian descent on his father’s side and “there is nothing Russian”, although in 2021 he lived in Moscow.
The Music top includes a DVRST remix of the song Komarovo from the game Atomic Heart, the developers of which have close ties to the Russian Federation.
The rates of payment per stream, announced by musician L.Dre in November 2022, are used to calculate taxes. The amount of payment per stream may vary depending on the country of the artist, the geography of the audience, and the types of subscriptions of the accounts from which the listening was carried out.
Thus, according to the number of streams per week, it was calculated how much an artist can earn per year, provided that his tracks are at the same position in the chart.
Taxes were calculated as the sum of income tax ( ) and VAT ( ). The income tax base was determined based on the margin: 10% of total income was considered pre-tax income.
In the Spotify rating, many tracks by rapper-bloggers were found, who entered their own nickname instead of the label. If information about cooperation with a label or distributor could not be found, the calculation was carried out according to the simplified system for individual entrepreneurs – that is, 6% of the income received.
The total amount of taxes for the year is $316.7k. According to the media, the cost of one Shahed-136 kamikaze drone is – that is, with taxes paid for song streams, you can buy from 6 to 15 “Shaheds” depending on the price.
There are two main models of working with artists on the Russian market: conditional publishing and the “project-artist” model. In the publishing approach used by major labels — Universal, Warner and the former Russian division of Sony Music Group — the key product is a separate track. All resources are directed to its promotion in the charts in order to increase profits from streams and sales. Because of this, different compositions of one artist can be promoted by different companies. In a model where the focus is on the artist himself, all his releases are promoted by one company, since it fully controls his activities. Examples of such labels are Black Star and Gazgolder.
Analysis of the tops showed that most Russian artists work according to the publishing scheme, that is, they can simultaneously cooperate with several labels. Small labels usually belong to large companies or are closely related to them, in particular those that distribute music to platforms, such as Universal Music Russia. In December 2022, the management of this company bought out “Kiss Koala” Belive Music.
In March 2022, after the start of the full-scale invasion of the Russian Federation into Ukraine, three major labels announced their withdrawal from the Russian market. Despite this, the Russian office of Warner Music continued to conclude agreements with local artists. According to kommersant.ru, the top management of Warner Music, in cooperation with the distributor S&P Digital, bought out the former Russian division of Sony Music. Previously, Sony Music removed its international catalogs from Russian streaming services, but transferred the rights to local catalogs to a Russian legal entity.
The study took into account taxes paid by labels and distributors. The table shows the total amount of tax deductions, as well as revenue from listening in all available locations.
Taxes are paid by both distributors and labels. Even if the label’s reporting shows zero figures or it operates as an individual entrepreneur, tax deductions from streaming tracks are still made by distributors.
According to incrussia.ru, as of January 2022, up to 55% of the revenue of labels operating under the publishing model falls on streaming platforms. And according to kommersant.ru, at the beginning of 2023, foreign services such as Apple Music and Spotify provided Russian artists with about 30% of their total revenue.
The analysis of streaming platforms shows that the presence of Russian artists in Ukrainian charts is still noticeable, even despite the general trend of decreasing interest in Russian content. Some performers stably maintain positions in the tops, and their popularity directly turns into financial revenues, which, through the Russian tax system, ultimately support its economy and military budget.
