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. Last Updated: 07/27/2016

Warner Will Provide Bee Line With Music

LONDON -- Warner Music has signed a deal to supply songs and ringtones to the country's No. 2 mobile phone operator, VimpelCom, as it seeks new ways to circumvent piracy problems in the worst-offending nations.

Making its first major foray into the Russian market, Warner Music, the world's fourth-largest music company, said Thursday that it was also the first to sign up with VimpelCom's new Bee Line digital service, which will reach the company's 50 million subscribers when it is launched later this month.

Financial terms were not disclosed.

"This is a market where essentially we have not invested in and one we didn't even really consider a market until wireless got the penetration it now has," Alex Zubillaga, the head of Warner Music's digital strategy and business development, said by telephone.

"In a market where there is no way we're going to have any physical platform soon, we now have a way to monetize our music," he said.

The deal includes the entire Warner Music catalogue, but begins with a focus on Madonna, whose controversial "Confessions" tour -- complete with mock crucifixion -- heads to Moscow in September for her first-ever performance in Russia.

As part of the agreement, Bee Line will be the headline sponsor of the event, and in return the service will be able to offer consumers five months of exclusive song downloads, ringtones and video clips from the iconic pop diva.

In addition to having about one-third of the mobile business in Russia, Vimpelcom operates in Kazakhstan, Ukraine, Tajikistan, Uzbekistan and Georgia.

Music companies are signing more deals with mobile phone operators, which are trying to lure consumers with new services. But in some countries, such deals also serve as a way to combat piracy, which has severely undermined the music industry.

Russia is the world's second-largest market for counterfeit CDs, according to the music companies' trade group, the International Federation for the Phonographic Industry. The legal retail market is $390 million, while pirated versions are estimated at $450 million.

"The fight against physical piracy with the help of the U.S. government and the IFPI is going to continue, but we can't depend only on that," Zubillaga said. "We're doing this in parallel with that fight."

Illegal digital downloads have also proved a major problem for the music industry, impeding sales in many countries, but mobile phones are a closed delivery system that have the operators as gatekeepers. On the Internet, by comparison, information flows more freely and without much regulation.

Warner Music earlier this year signed a similar deal with China Unicom, the second-largest mobile operator in China -- a country notorious for its huge pirated CD market.