How Business from the CIS Survives at the Moment?
Story of One Ukrainian Entrepreneur
Imagine that you are a Ukrainian who has building their business in the CIS for the last 10 years. What would you do now? This is the situation that many Ukrainian entrepreneurs in the music business are now facing, given the fact Russia was the centre of the CIS music business, and Ukrainians made up a significant part of the music business in the region.
Ekaterina Polishchuk is in a completely unique position as a Ukrainian with Russian citizenship, and outstanding music expert with a background in the independent press. She was born in Donetsk, now a center of the Russian-Ukrainian conflict. When the conflict was on the verge of escalation and tensions grew, her family moved partly to Kyiv, partly to Moscow. Prior to her career in the music business, Ekaterina (or Kate) worked for the independent Russian newspaper Novaya Gazeta, whose editor-in-chief Dmitry Muratov was awarded the Nobel Peace Prize.
She later joined the marketing team of Warner Music Group local office and started her own business in 2018 after leaving WMG. Her first client was rapper FACE, known for his independent political views. FACE became the best artist in Russia and the CIS countries by 2019: his track “Humorist”, with lyrics that question freedom of speech in Russia, became one of the most popular tracks in music streaming that year, and the artist was awarded the “Artist of the Year” GQ and entered the Forbes “40 before 40” list.
At the same time, Kate was developing her artist management center Wool Music for music artists, and in 2019, she also began working closely with steezy, an independent record label and music marketing agency, leading to a full merger of the two businesses in 2020. In 2021, Wool Music & steezy worked with over 100 artists on their roster.
Moreover, they became a company operating in foreign markets. Contrary to the official policy of the Russian authorities in recent years, Russian business has remained inventive, progressive and figured out how to remain part of the global market. By 2021, Kate and her team have been working on new releases of Call Me Kharisma, shows of Bhad Bhabie and launching campaigns for international record labels.
But February 24, 2022 changed that forever. The situation faced by entrepreneurs after Russia began military operations in Ukraine is catastrophic. What changed?
- The local music industry has been practically separated from the global one: Spotify left the Russian market, Apple Music suspended the work of the local office, most of the new music releases are not delivered to the territory of Russia; Instagram, TikTok and YouTube paid promotions are not available; Instagram is blocked by the government, and this is not the whole list. There are a few local Russian DSPs left and a couple of national distributors, which are now practically monopolists.
- Russian artists are still shocked, the number of new music releases in Russia has dropped significantly. Any artist who criticises state policy or talks about the war can be subject to local repressive laws.
- As a result, forecasts are very negative: the industry expects music monetization to fall from 40% to 80% in the CIS region by the quarterly reports in August.
- The changes also affect the Ukrainian market: Russia was the business center of the CIS region, so Ukraine, despite the fact that it was not excluded from the international music community, has to overcome a number of obstacles related to the lack of local or regional offices of music companies.
This is really very sad. For example, Spotify stated that its Russian launch was the most successful Spotify launch in history, and Russia with the entire CIS region has shown outstanding growth in recent years. Now there is not only a humanitarian catastrophe, but also an economic one: manufacturers, retailers, film producers, transport companies — all are going through difficult times.
So what the music businesspeople in Russia, including Ukrainians, are doing now?
- Relocating. This is one of the most urgent issues. They completely or partially move top management and staff, as well as open new legal entities and bank accounts. Kate has already founded a company in the US, while her colleagues have partially moved to Turkey. The most popular destinations are Georgia, Armenia, Turkey, USA, France, Turkey.
- Changing strategy. Kate and her team have began to increase the number of clients outside the CIS, and this increased the share of income from international partnerships only during the first three months from 20% to 45%. Last year they started promoting progressive genres such as hyperpop and working with internationally popular artists, which now gives them the opportunity to integrate into the international community even faster.
- Developing new projects. Innovation is one way to deal with circumstances. Now Kate has a bunch of new projects at the testing stage: creating new IT solutions for the financial reporting of record companies, developing a music management franchise that will allow more small and medium-sized artists to receive professional management, and much more. Some projects will take their place in an ever-changing world, while others will be closed.
Ekaterina Polishchuk is one of those who are determined to survive in this market, to fight political and social circumstances at all costs. In the near future, the international music market will no longer be the same as it is today, and the economic boundaries between territories will continue to blur. The world of the highest globalization that the world has ever experienced is a major milestone for humanity, and separation from the world can lead to collapse and bankruptcy. May there be fewer boundaries and may the music industry continue to thrive.
Wool Music Agency: https://wool-music.com
