The Russian Press Market

1. Introduction
Since the collapse of the Soviet Union at the end of 1991 the Russian Press Market has undergone profound changes regarding legal regulation, ownership, economy, printing facilities, newsprint, publishing, distribution, and information flow. After the «Golden Age» of the late 1980s the press in Russia entered a time of serious economic problems. A sharp fall of circulation of the so called «central press» and growing dependence on subsidies from the government followed. In 1990 e.g. the Komsomolskaya Pravda was mentioned in the «Guinness Book of Records» to be «the largest sold circulation (21.900.000) of any daily newspaper in the 20th century». By 1994 this circulation was down to about 2.400.000. The second largest daily, Trud, fell from a circulation of 21.400.000 in 1990 to 2.600.000 by 1993, Pravda from 7.700.000 to 1.100.000. After times of turmoil and restructuring the circulation figures of Komsomolskaya Pravda in 2003 totalled 712.000.

2. Some history
2.1. The Russian press after «Perestroika»
The demise of Communist rule in the USSR, followed by the disintegration of the Soviet Union itself, has brought a collapse and restructuring of most of the basic elements in the country. Partly caused by the activity of the mass media, it has also brought the fall of the old system of press and broadcasting. «Glasnost», which originated as an official Communist Party policy supposedly directed to open a critical discussion of the country’s past and of ways to improve socialism in the USSR, has broken the bonds of censorship and spread beyond all possible limits towards freedom of speech and press. «Perestroika», the restructuring of the Soviet economy and society which took place between 1985 and 1991, created new material circumstances and foundations for the development of the press (and broadcasting).

2.2. Legal regulation of mass media – freedom of the press
Among the most important constructive events that have taken place in the 90s of the last century has been the establishment of a legal basis for the freedom of speech and information. Under the Communist rule Soviet mass media had no legal basis; their activity was regulated by decisions of the Communist Party’s bodies and functionaries. Retrospectively, those decisions were in conformity with the «Decree on the Press» signed by Vladimir Lenin on October 27, 1917. That Decree introduced «temporary and extraordinary measures to stop the flow of dirt and slander», but was never revoked during seven decades of Soviet rule. Only in 1990 the «Law on the Press and Other Mass Media» and in 1992 the Russian Federal «Law on Mass Media» were created as serious legal guarantees of media activity in accordance with democratic principles. The new Russian Constitution adopted by national referendum of December 12, 1993, is the latest and most important act that guarantees freedom of press and speech. Nevertheless the mass media and press freedom situation in the Russian Federation continues to be difficult, according to the Vienna-based «International Press Institute» (IPI). The main threats to press freedom are government control of the independent media through various branches of the state apparatus. The Federal «Law on Mass Media» is now being revised. The main aim of this revision is to clarify the issues of ownership, rights and obligations of mass media. While the number of independent publications with financial means to support themselves has increased considerably, and continues to provide different views, direct criticism of the president and other senior officials has become more restrained and less frequent than in the 1990s.

3. The Russian press market today
3.1. The economic environment
The rate of economic growth of Russia remains among the highest in the world which certainly has a positive influence on the whole media industry. The Russian media market is one of the most promising and prospective. Today its successful development is favored by a stable economic situation in the country, a constant increase of readership demanding a high quality press, improved technologies, a growing inflow of internal and foreign investments into the press industry and an impressive growth of advertising revenue. There has also been explosive growth in mobile telephony and internet use. In contrast to its Western counterparts, the Russian advertising industry is booming.

3.2. Publishing – independent publications appear
New private printing presses with color capacity are appearing in Moscow as well as in the regions. The government has talked about privatizing state owned printing presses and the need for less state intervention in the press. In 2003 the volume of the Russian media market was more than $ 6.5 billion, and it is expected to increase up to $ 10 billion by 2008, growing about 5.7 % annually. According to experts, the media market of Russia is one of the most dynamic in the world, only yielding to India and China. The number of newspapers and magazines published in Russia has steadily increased over the past few years. Now there are more than 45.000 periodicals registered, including 28.500 newspapers, 16.600 magazines and about 3.500 almanacs, bulletins and magnetic media (not all of them published regularly though). Another 1.500 titles are expected to hit the market in 2005. Some publications, e.g. Moskovskie novosti, Kommersant, and Kuranty among them, have from the beginning categorically rejected any state help on the grounds that «the free press must save itself by its own means». Others accepted state help, and the government was quick to learn that economic pressure provides as effective a tool for control over editorial policies as did the ideological and political dictate exercised by the communists. Total annual circulation of newspapers in 2004 reached about 8.5 billion copies. By comparison, the circulation of magazines only reached about 600 million. Whereas newspapers are published in the entire country, magazines are basically issued in Moscow and Saint Petersburg. The glossy magazine market has expanded rapidly in the past ten years. The press used to consist almost entirely of daily and weekly newspapers before a change in licensing regulations enabled a number of publishers to establish themselves in the country. The German publisher Burda has managed to take control of much of the women’s lifestyle sector, and today most large western publishing companies are present in Russsia.

4. Distribution today: Towards an organized market
4.1. Privatization of press distribution
National distribution of the Press in Russia used to be a monopoly, belonging to Rospechat (Russian Press), a semi-independent agency under the Ministry of Communication. Its predecessor, Soyuzpechat (Union Press) operated, at the peak of its activity in the 1980, 833 small shops, 37.000 newsstands and kiosks and 9.900 newspaper vending machines. It was selling and providing subscriptions for almost every newspaper, magazine and journal, using its branches in every district of the country and every post office nation- wide (about 47.000 in 1993). Rospechat had been strongly criticized by the editors for the high commission it requested for its distribution services. At the beginning of the 1990s privatization of the kiosk chains began and became the basis for new private distribution companies.

4.2. National distribution and wholesaling
When analyzing the Russian press distribution market it is necessary to take into account geographical and demographic features of the country as well as its level of economic development. The rates of economic growth remain among the highest in the world. But at the same time the press distribution market is challenged by such factors as the huge territory, low population density and insufficient purchasing power. Today the Logos Company Group is the most prominent operator in the press distribution market of Russia and the CIS. It was founded in 1992 now serves more than 12.000 retailers. In Moscow alone LOGOS operates more than 700 own press outlets. Rospechat continues to be an important player, especially in the field of subscriptions, as well as the Russian Post. ARPI is a third company that is strong in Siberia, but almost 60 % of the market is made up of numerous small companies. At present the Press Distributors Association of Russia, together with the publishing industry, is working on a set of basic rules in order to streamline the still rather unstructured market. A document similar to the «Code of Practice» of Distripress might be a good start for a structured cooperation.

4.3. Retailing
In the period of privatization an army of several thousand individual sellers appeared and influenced the Russian press distribution market, and they continue to remain a substantial market player. The distribution markets of Moscow and St. Petersburg differ vastly from the regional markets. Overall the number of retail outlets is estimated to have reached about 77.000 in 2004, resulting in a density of sales points of close to 1.900 people per outlet, considerably less than in Western Europe. The number of kiosks and newsstands is estimated at 25.000, stands and tables at 35.000 and mobile outlets at 17.000. Small cash-and-carry shops where retailers as well as individuals can shop (at different prices) are a unique form of outlet. Supermarkets and gas stations account for some 15% of the market in Moscow, but for only 3% in the regions.

4.4. Imported press
Foreign publications are freely distributed in Russia today and are available at those sales points where there is demand (airports, major hotels and selected city locations). Two Distripress members are now primarily engaged in importing foreign publications, Press Point International (belonging to Hachette Distribution Services) and MK Periodica (the former «Mezhdunarodnaya kniga» – newspapers, magazines, books). Also the LOGOSgroup intends to become more active in the import-export business of publications.

Author: Dr. Heinz Graf