Spotify Cancels Launch Plans in Russia

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Spotify CEO Daniel Ek

Poor economic conditions and a new personal-data protection law are reportedly among the reasons.

The Sweden-based music streaming service Spotify has canceled plans to launch in Russia amid the slowing economy, the falling ruble and new personal-data protection legislation.

Bloomberg reported that Alexander Kubaneishvili, head of Spotify's Russian office, stated that the company is not going ahead with its launch, which had been planned for the first half of 2015. He added that he was set to leave Spotify due to the canceled start.

Spotify's spokesperson declined to comment.

Meanwhile, the Russian business daily RBK quoted a source close to Spotify as saying that the main reasons for canceling the Russian launch were the economic downturn and a new personal-data law, which is to come into effect in Russia on Sept. 1, 2015. Under the law, Russians' personal data will have to be stored in Russia only.

"Spotify is a cloud service, and it couldn't operate in such a way that Russian's data are stored in Russia and Swedes' data are stored in Sweden," the source was quoted as saying.

Spotify's Russian office was opened in early 2014, and the company originally planned a Russian debut the same year, but later moved it to 2015 as negotiations with potential local partners took longer than expected, the Russian news agency TASS reported.

Currently, the only foreign player in Russia's streaming music segment is Australia-based Guvera, which launched last year and is competing with local companies Yandex.Music and Zvooq.

According to PwC, Russia's total digital music market amounted to $32 million in 2013, the most recent data available. iTunes, which launched in late 2012, is the main foreign player.