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Ulmart acquires 'close to 50%' stake in Zvooq and Bookmate

0 23 May 2014

Leading Russian online retailer Ulmart has moved a step closer to adding digital content to its online store by acquiring a minority stake “close to 50%” in Dream Industries, which runs Spotify-analogue music service Zvooq and e-book library Bookmate

The shares were previously held by Koshigi, a fund owned by Ulmart co-owner Dmitry Kostigin. Earlier this month Kostigin indicated his intention to sell these shares to Ulmart, and explained that the company intends to start selling digital content on its platform in the near future. 

The deal was completed in two parts. Ulmart paid $6.5 million to Koshigi for some of the shares, while the rest were exchanged for shares in Ulmart worth “between $35 and 60 million - depending on Ulmart’s valuation”. 

Kostigin indicated that Yano Holdings now owns around 40% of Dream Industries, which is registered in Cyprus, while Finnish fund Essedel also has a stake. 

While Kostigin is realistic about the difficulty of getting Russians to pay for digital content when so much is available for free, he believes that it is possible to make money from it:

"Russia needs a multi-platform service (books in no less than 6 formats) that works on different devices. Piracy has flattened the Russian market, but if consumers were offered an inexpensive, good quality service that allowed them, say, to pay 30 roubles (less than $1) and download the 30 best comedies of the year in excellent quality in just a few seconds, then they might well be willing to pay. It’s just the same with music. The experience of developed markets shows that a subscription system probably works better than individual downloads. We’ve got some useful experience and some decent ideas that should allow us to take the industry forward. So you can expect to see books, music and films in Ulmart’s online store within the next year.”

Ulmart is not the only Russian retailer trying to break into the digital content market. Earlier this month Ozon acquired a stake in LitRes, Russia's most popular e-book and audiobook service. 

Source: e-pepper

Top image via Shutterstock

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