The kremlin Has Turned the Music Industry into a Loss-Making State-Run Entity

russian music labels are losing massive amounts of money. In 2025, all major market players’ revenue growth slowed down significantly, while many companies’ profit either fell or remained flat. This was influenced, in particular, by the Ukrainian audience’s refusal to consume russian content.

For example, the koala music label (sergey lazarev, kai angel, kishlak) saw its net profit plummet by 47.6%. S&P Digital (feduk, pharaoh, dima bilan) reported a 26.9% drop in net profit. The label “first music publishing” (nyusha, sergey zhukov, vladimir presnyakov) saw its net profit stagnate at the previous year’s level.

Market participants directly attribute this to the increase in the corporate income tax rate from 20% to 25% starting in early 2025, as well as to rising demands from artists who are short of money.

The situation with the vk records label (timati, mona, yura-yura) is especially telling; it is controlled by a holding company owned by the son of sergei kirienko, the first deputy head of the russian president’s administration, who is known for his lack of business acumen. Despite the 51% increase in revenue, profits remained meager – just 37 million rubles. At this, this label, which is as close to the kremlin as possible, is actively expanding its roster and recruiting artists most loyal to putin: by the end of 2025, it had over 300 artists under contract, and its catalog exceeded 11,000 tracks.

After the profitable Western major labels (Warner, Universal, Sony) withdrew from russia, their place was quickly taken by loss-making entities closely tied to the russian government (vk, “mts”, “gazprom-media”, and others). As a result, as in many other sectors, russia’s music market is now under the direct control of the kremlin.