Vkontakt & universal sign anti-piracy & licensing deal

As predicted last week, the company which owns vKontakte and Russia's two other major social networking sites has signed a music licensing deal with Universal Music to end piracy on the platforms. As a result, all outstanding copyright legal action between the companies has been settled.

After years of being branded one of the world’s worst Internet piracy facilitators, social networking giant vKontakte has taken a huge step towards fixing its reputation.

As predicated last week, vKontakte owner Mail.ru has now signed a licensing agreement with Universal Music and United Music Agency which will see music and video content appear legally on the platform.

The deal also covers Mail.ru’s two other social networking platforms, Classmates (Odnoklassniki) and My World. Along with vKontakte, these sites are the three most popular social networking platforms in Russia.

With the agreement now signed, Mail.ru has licensing agreements in place with the three leading music rights groups – Universal Music Group (UMG), Warner Music and Sony Music.

In addition to allowing huge catalogs of music to appear on vKontakte legitimately, the Universal deal also puts to rest all copyright-related legal action between the companies. VKontakte has now settled its differences with all three music giants.

Details on the UMG deal are scarce, but Mail.ru says that its social network platforms will “test various monetization models jointly with other market players” to find the best solution for artists and fans.

Insiders familiar with the negotiations told Russian news outlet Vedomosti that Universal has received a “minimum guarantee” that it will generate around $8m over the next three years.

VKontakte CEO Boris Dobrodeyev welcomed the deal between the companies and expressed optimism for the future.

“Following extensive negotiations, we have agreed terms with all of the major music rights holders, enabling us to draw a line under this process. This is a historic moment and a new milestone in VKontakte’s history,” Dobrodeyev said.

“Our constructive and mutually beneficial collaboration has put an end to earlier disputes with the record companies. Following the removal of legal barriers, we can now create new products based on VKontakte’s music service that users will value.”

Adrian Cheesley, Senior Vice President at Universal Music Group, said that the deal will ensure that artists will now be paid when their content is exploited on social networks.

“Music has tremendous value and we’re gratified to reach a commercial agreement that ensures UMG’s artists are fairly compensated for the use of their music,” Cheesley said.

“Russia is an important, and growing, market for UMG and with this important step we’re looking forward to developing more local artists, investing in growing the music scene and broadly licensing services.”

It is not yet clear how the terms of the licensing deal will affect how music is made available on vKontakte in future, but it’s likely it will be less of a free-for-all than it currently is. Music downloaded from vKontakte is an important fuelling element of the pirate content landscape so this is definitely something to watch in the weeks and months to come.