As Spotify creeps towards a reported IPO later this year, it is also carefully continuing to build out its international footprint, specifically targeting fast-growing, emerging markets. On that front, the music streaming giant has hired Alexander Kubaneishvili away from Google to run operations in Russia.
(Yes, another Google exec who specialises in advertising partnerships has been poached.)
The news of the move was first reported in Russian financial publication Vedomosti, and we have confirmed and also clarified the details with a source close to the company. Kubaneishvili, we understand, will begin work next week, and the company is preparing for a Russia launch around the third quarter of this year.
This would not be Spotify’s first market in Eastern Europe: Poland, Slovakia, Bulgaria and others are in the over 50 countries where Spotify is already active.
But it signifies what could be Spotify’s first big move into the so-called “BRIC” bloc — the economic grouping of Brazil, Russia, India and China that represents huge populations (Russia is Europe’s biggest internet market today) and fast growth because the economies are less mature than those in the U.S., UK and others in Western Europe and therefore still in earlier stages of adopting online services. (That also represents a big opportunity for Spotify in terms of getting people hooked in early.)
From what we understand, Spotify is also working on launching in Brazil right now, too. It’s up to where licensing gets finalized quicker as to which country might launch first. As with Russia within Eastern Europe, Brazil would follow launches in several other, but smaller, Latin American countries.
Kubaneishvili, according to his LinkedIn profile, worked for Google in Russia for two-and-a-half years. His most recent role was that of “industry head,” overseeing partnerships with big brands and others. He’s also worked in sales and business development for Microsoft, Gigafone Technologies, i-Free and MTV.
The fact that Kubaneishvili is a business development and sales guy first and foremost says something about where Spotify is going as a company.
Now that Spotify has established a platform and market position as the leading place for streaming music in terms of subscribers, it is focusing on building that out to as wide a footprint as possible to capture better economies of scale. That’s an essential element of Spotify’s business model, which is partly based around getting small-percentage returns after paying out royalties to labels and artists; and partly based around advertising off the back of large audiences.
A move into Russia has been in the works for a while, with the company recently starting to advertise for other positions to fill out a Moscow office. It’s currently on the look out for a director of label relations, a senior accountant and a marketing and PR exec.
While coming to Russia signifies evolution for Spotify, it’s also a kind of coming of age for Russia itself. The country has held the dubious distinction of being a leader in music piracy, and that has held off many a digital music distributor from breaking ground there. Recall that it was only at the end of 2012 that Apple launched iTunes in the country.
But, when you consider how quickly internet usage is growing in Russia, and how other digital media consumption, such as that of online video, is following along accordingly, digital music companies were bound to follow.
We’ve reached out to Spotify for a comment for this story and will update as we learn more.
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