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Interview with ANDREI SUMIN, MD of Sony Music Russia - Dec 30, 2002

“Because of the piracy, the main source of income for Russian artists is concerts”

picture Based in Moscow, Andrei Sumin is the Managing Director of Sony Music Russia. Here he gives us a picture of the music industry in Russia, finding new talent, the media situation, problem with piracy, and more.

How did you get started in the music business and how did you become the Managing Director of Sony Russia?

I started from scratch in 1992, when I opened a small CD wholesale company. At that time, the CD was a brand new product in Russia and it became our niche market. In 1993, we chanced upon the idea that it would be more profitable to release our own records and we signed our first artist, Anastasia, the Russian star. Those were my beginnings in the record business and for years I worked in all its areas, although I was mainly a shareholder and a director. Then, in 1998, I got an offer from Sony Music Europe to become the head of their new subsidiary in Russia, which I accepted: I became the Managing Director of Sony Music Russia.

What experiences have been important in developing your skills as an A&R?

My experiences in nearly all the fields of the record business, and certainly the best ones involved spending a lot of time in the studio and with musicians, discussing their material. I was never a musician myself; I have a Degree in Natural Physics.

What's the story behind Sony Russia?

We started on 1 December 1999 and it was a very difficult time. We were supposed to open office in 1998, but because of the then-current crisis in Russia, it was postponed for a year. We are a relatively small company for the moment, with a total of 15 employees, including six in marketing and one in A&R; I also do some A&R.

We operate in a huge territory and have the rights for several countries, the biggest markets being Russia, the Ukraine and Kazakhstan. The combined population is about 200 million people, but the situation is difficult because, out of these 200 million, more than 27% have a monthly income of less than US$70, which makes it difficult to sell CDs, DVDs and music cassettes. Because of this and poor legislation, we have a huge problem with piracy.

We concentrate our efforts on the promotion and marketing of the vast international Sony catalogue, as well as trying to build our own catalogue. We are very selective when it comes to signing artists, and we currently have six artists in our roster. Four of them are now superstars, but all of them except one started with us as baby acts.

Who are your artists?

The big ones are the pop/rock duo B-2, the first act we signed; rock band Splean, who were already established, although we signed them at a very low point in their career and they’re now returning to superstar level; and pop/r&b singer Ariana, the most promising of our artists. She was born and raised in Texas, USA, but her parents are Russian, that’s why she now lives in Russia and sings mainly in Russian. Then there’s a girl trio from the Ukraine named Viagra; they're a novelty band. The developing artists are Tomas, a rock band, and another female singer.

Are you currently looking for songs for any of the artists you work with?

B-2, Splean and Tomas all write their own songs, as rock artists usually do. But we're looking for songs for Ariana right now. We released her debut album two months ago and it's a Russian language album, although we translated several songs into English. Now we're looking for international songs for her because we believe she has great international potential.

Do you concentrate on genres of music that are particularly strong in the Russian market?

We try to cover all genres, but traditionally the strongest genre in Russia is chanson, and then pop/rock, which we are concentrating a great deal of our efforts on now.

How much do you consider possible international sales when signing a new act?

The Russian music market is isolated from Europe and the US, largely due to the language barrier, so we don’t seriously consider other territories when we sign local artists, although we did keep international sales in mind when we signed Ariana. But that's something for the future, because she's very young, only 16 years old.

How do you find new talent?

We listen to the demo material we receive, we look at TV and listen to radio, and we go to clubs. We make the most of all the possibilities when searching for new talent.

So you accept unsolicited material?

Yes, and we get up to 20 CDs per week. We found a band from Siberia through a demo and although we didn’t sign them, we were interested.

How useful is the Internet when it comes to finding new talent?

For the moment, it isn't particularly useful. Poor communication lines mean that the Internet doesn't play a huge role in Russian business. But we’re thinking about it for the future and we're preparing ourselves, in fact we have an A&R page on our website where we explain what formats we except, how to send us demos, what we can do for artists, etc.

What do you look for in an artist?

Talent, personality, image and the ability to perceive the realities of the world, because it's very difficult to work with artists who don't want to understand that the money we invest in artists comes to us from record sales.

How important is it that the artists you work with also write songs?

It's very important. We feel more secure if artists can create their own hit songs and we don't have to depend on publishers and on whether there are hit songs available.

When considering signing a new act, do you pay attention to who the manager is?

Yes, we have a careful look at who the manager is. The manager is sometimes the key man, because he stands between the record company and the artist and many things depend on what position he takes. Does he understand about all the costs we have and the fact that we’re only making money from selling records? Does he appreciate that? All managers will say that they're only trying to protect the artists, but we're not trying to hurt the artist, we're trying to cooperate with the artist.

Managers are very important in Russia, because managers are often also record producers, booking agents, legal and business advisors, and even bankers to the artists. The worst situations occur when managers create problems between artists and record labels for their own profit: they'll create artificial problems and tell artists that we're playing dirty games. Their aim isn't to break the contract; their aim is to show the artists how they can solve these artificially created problems by pushing the company. But generally, it's better that the artist has a manager.

In general, how much does a newly signed artist get in advances?

Not that much. Because of piracy, the PPD (Published Price to Dealer, the price retail pay to wholesale and from which artist royalties are calculated – Ed.) on local repertoire CDs is about US$1 and it's possible to sell perhaps a quarter of a million legitimate CDs. From that income, you have to pay the recordings, marketing, videos and advances. So advances are generally in the range of up to US$50,000 and they are all recoupable.

How much does it usually cost to record an album and then market and promote it?

It depends on the ambitions of the artist and whether he or she can work effectively in the studio. I know artists who spend two to three days recording one song and I know others who record in just two to three hours. But generally, the cost of an album studio recording in Russia, from multitrack recording to mixing, can be up to US$30,000. As for marketing and promotion, the budget for a star-level album is not more than US$100-150,000, which is basically recoupable from concerts because record sales alone are not enough to cover these costs.

Do artists in Russia share the costs for videos?

Usually, yes. Because of the piracy problem and the lower PPD the main source of income for artists is concerts, even for artists with gold albums, and they need the videos to promote their tours. The costs for videos are up to US$30-50,000 and it's often too expensive for record companies. You can spend US$100,000 on the whole album, but in addition to that artists need two to three videos per year to keep the audience interested, thereby securing their concert schedule, so they generally share the cost of the videos.

Do artists share the costs of making the album, and, if so, do you think they should also share the ownership of the masters?

We try not to share the recording and production costs for that very reason, to retain ownership of the masters. For us as a record company, this is our one and only asset. But if artists shared the costs, I think they should also share ownership, although it depends on the legislation applicable in each particular country.

Do you think unsigned Russian artists are knowledgeable about the music industry?

No, but it would certainly be useful if they learnt more about how it works and about the mechanisms of making profit. But conditions in Russia differ from those in Europe and in the US and we are only beginning to build the music industry in Russia, so it is understandable.

In general, what do you think of Russian artists, songwriters and producers?

Many are very talented, but because of the isolation of our market, they aren't able to break across the border and become known in Europe. Their strong point is their ability to work in such a wild and unfriendly environment, but because the music industry is weak in terms of sales, they concentrate their efforts on fast results and the quality usually suffers. So that's their weak point, but then they need the money.

The big difference between Russia and the US is that Russian artists and producers concentrate their efforts on live shows, whilst Americans concentrate on record production. The record industry in America is strong and royalty points are much more important to artists, producers and songwriters than advances. In Russia, people will usually try to make as much money as possible today; they don’t care about the future and how long the record will last.

What do you think about the media situation in Russia? Do radio and TV break new artists?

TV and radio don't like to break new artists; they want to receive established hits. But how is it possible to create a hit if nobody hears it? It’s a catch-22 situation.

We try to get airplay for our records, although our radio stations are very conservative and too strictly formatted. It's only possible to reach the audience, the potential customer, if the music is played on the radio first and then on TV. TV is very important and if there's no video, radio will sometimes not play the record, even if they like it. TV is also very expensive, because there’s a tradition of pay-to-play on Russian TV: people pay bribes to get their music played, although we don’t, in fact it's our policy not to pay.

The most important music TV station is Muz TV; they accept bribes and it costs about US$300 per airplay. MTV has lower ratings than Muz TV, but at least there’s no evidence that they're getting money. The most powerful radio station is Russian Radio: they have about 300 affiliates all over Russia and they play 100% local repertoire. Then there's Europa Plus, which is hits-formatted, and they play 70% international Euro hits and 30% Russian music.

How big do you estimate the market share lost to piracy is?

In Moscow, up to 65%, and in the regions, up to 90%.

What can be done about it and by whom?

The legislation protecting intellectual property must be improved, although the last two to three months have seen a noticeable increase in the enforcement of copyright laws. In October, the government decided to establish an inter-ministerial commission to fight piracy, which is a huge step forward as for many years the government didn't even talk about the problem. Then there was one month of police raids on retail, kiosks and street markets in Moscow and, on 13 November, over 72,000 pirate DVDs were taken from warehouses in Moscow and there's a huge investigation about it now.

If you could dramatically change some aspect of the music industry, what would you do?

I try to consider all aspects of the cultural, political, economic and technological environments, because the music industry reflects all of those and they all pose challenges to us. What's most important to me is intellectual property protection, because, besides good music, which is the core of our business, our ability to protect intellectual property is the critical factor for us as an industry.

What has been the greatest moment of your music career?

I hope it's still to come, when we break an act in Europe or in another big market, and I hope it will be Ariana.

What do you see yourself doing in 5-10 years' time?

I’ll definitely be working for Sony for the next three years, as my contract states. In five years' time, I don't know. But I can't imagine not working in this business, so I think I'll continue to work in it or otherwise retire.

Interviewed by Kimbel Bouwman