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Warner Music Investigating Subsidiary’s Actions in Russia

By Gary Symons

TLL Editor in Chief

Warner Music is investigating allegations that one of its subsidiaries continued to operate in Russia after the company suspended its operations.

Those allegations were made in an exclusive investigative report by The Guardian newspaper. According to the report, at least one executive at the Warner subsidiary ADA Russia “… continued to try to broker deals despite the suspension of business after the invasion of Ukraine.”

The report also says the French music company Believe had also tried to broker deals in Russia.

In the case of ADA Russia, The Guardian says it has acquired an email written in March from a top executive, who works in Warner Music’s offices and has a Warner Music email address. That puts the email date one month after Warner announced in March it was suspending all operations in Russia over that country’s invasion of Ukraine.

The email appears to have been a marketing communication in which the executive reached out to musicians and/or their agents, seeking “potential cooperation,” and offering rates for a range of services. It also cited a number of Russian musicians that ADA Russia already works with.

“I would like to note that our streaming rates are much higher, we can do vinyl releases as well, and we offer advanced analytics,” the executive wrote. “Everything is ready, and we’d like to demonstrate it in examples. We would like to meet up with you and discuss in person all the opportunities and our potential cooperation.”

Warner Music Group told The Guardian that the email is in direct contradiction of its corporate policy in Russia. WMG announced on March 10 this year that it was suspending all its operations in Russia, including investment, project development, promotions and marketing, and the manufacturing or sale of all consumer products.

The spokesperson for Warner Music Group, who was not named by the Guardian, confirmed that the executive should not have been conducting business in Russia and that the company has launched an investigation.

“We suspended our operations in Russia in March,” he said. “This email is more than five months old, but it should not have been sent. We’re investigating what happened and we’ve also reiterated the rules of our suspension to our local team.”

As well, despite the email obtained by The Guardian, it does appear that ADA Russia is not transgression operating in breach of Warner Music’s rules on a day-to-day basis.

Ironically, Warner was among the first Western countries to pull out of Russia in protest of the invasion of Ukraine, and it is owned by Ukrainian-born billionaire Sir Leonard Blavatnik through his company Access Industries. While Blavatnik currently has US and UK citizenship, he and the company were quick to condemn Russia’s attack on the country of his birth.

ADA Russia is not a major part of Warner Music’s operation, and primarily works with Russian independent labels and artists, including Zemfira and Gorky Park. It is a division of Warner Music Russia, and does not represent any major international stars.

While it appears the situation at Warner Music may have been a single incident that did not reflect the company’s policies, a wider investigation by The Guardian and Billboard raises allegations that the French music publisher Believe “… is continuing to operate in Russia on a much larger scale including making payments to a local streaming service that until recently was owned by the country’s largest lender, Sberbank, which is on UK, EU and US sanctions lists.

Believe is considered one of France’s largest entertainment and tech companies, and represents a number of Europe’s most popular musical acts.

The Guardian alleges that Believe “advised Russian partners how to continue to work around sanctions while also saying it remained in full compliance with international sanctions.”

The Guardian says it acquired a copy of a newsletter sent to its Russian partners in March, a month after the invasion, updating them on its continued operations and suggesting ways to send or receive money despite sanctions.

The update, which the Guardian has reviewed in both the original Russian and an English translation, assures its partners that it continues to operate and will continue to make scheduled payments, except to those whose accounts are with banks that have imposed sanctions.

The letter then goes on to offer solutions to legally circumvent the banking ban by advising opening a new account with a restriction-free bank and then linking it to Believe.

It was shortly after that article was published that Believe announced it would be ceasing new investments in Russia, but revelations in both Billboard and The Guardian now raise questions about whether the company carried through on its promise.

Both The Guardian and Billboard reported on September 20 that Believe is not only continuing its work in Russia, but also trying to expand its market share.

Europeans who support Ukraine have been outraged over news of an August 30 email in which a senior Believe executive in Russia offered a Russian record label 3 million euros ($3 million) for rights to its catalog and future releases.

For its part, Believe says it is not expanding its operations, but merely maintaining operations with current clients to protect and sustain the musical artists it works with.

A spokesperson for Believe told Billboard that it is “maintaining all its operations in Russia in order to support its artists, labels and protect its people’s safety as well as ensure access to music production and distribution.”

The company also claims the Russian executive’s 3 million euros offer to the independent Russian label is not an attempt to grow Believe’s market share, but is standard “distribution activity over the course of a multi-year relationships with an existing label partner.”

Believe also says it has halted any new investments, mergers, acquisitions or expansion in Russia, but Russian labels and artists told Western journalists that this is not the case. Both Billboard and The Guardian interviewed music executives in Russia that said Believe is approaching several musicians and labels, including those that have existing deals with other Western labels.

Billboard quote one Moscow manager who said, “Believe is still very active in Russia. They said they can help us with our back catalog and that they can help us get our music out.”

Another Russian music executive said Believe has “aggressively approached” all their local clients, offering them a route to market after other options disappeared. “They insist that our clients transfer the catalogs to them even when they know that they have the exclusive ongoing contracts with us,” he said.

Believe, however, says it has lived up to its promise to halt new investment. “Believe has pledged for peace and made the choice to continue to operate with its local clients, artists, and partners in the Russian market in compliance with all applicable laws and regulations,” said a spokesperson for Believe. “Believe is maintaining all its operations in Russia in order to support its artists, labels and protect its people’s safety as well as ensure access to music production and distribution. Believe’s mission always remains to protect creation, artists, music and its people all over the world, and to support both teams and people.”



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