Russian Media Model:New Economic Structures: Russian Media Model: New Economic Structures Professor Elena Vartanova Faculty of Journalism Moscow State University/ Aleksander Institute, Helsinki University


Lecture 3. Evolution of Media Market: Lecture 3. Evolution of Media Market Nature of economic changes Progress of advertising industry New consumers


Media in Russia: How to Assess?: Media in Russia: How to Assess? Change? - Yes Transformation? - Yes Evolution?


Russian Economy afterthe Soviet Union: Russian Economy after the Soviet Union Basic changes: privatization, liberalization of economy, rise of resource-based economy, stagnation in industrial production, growing poverty, decline in system of social security system, health care and education system Recent trends: Economic growth based on oil export Rise of telecommunication industry, Rapid growth of the Internet: 14% of population (2005) Boom in mobile telephony: estimates between 54 - 83% (2005


Economics of the Soviet Media: Economics of the Soviet Media Combined state - party ownership Planned financing through redistribution of the Communist party and state money Top-down subordination of media outlets Surveillance and coordination of information flows Heavy investments into some sectors of infrastructure (post, TV terrestrial network, satellite communications) No attention to audience needs Immature advertising


Major Factors of ‘Change’ in Russian Media Economy: Major Factors of ‘Change’ in Russian Media Economy Disappearance of ‘plan’(partial withdraw of the state), introduction of private ownership (privatization) and ‘free’ market relations (does journalism sell?) Lack of industry resources for strategic investments into infrastructure and therefore dependence upon ‘resource oligarchs’ Digital revolution: uneven pressures from the ‘global’


Economic History of Russian Media Industry: Economic History of Russian Media Industry ‘Privatization’ (1991-1996): emergence of integrated political-business elite + privatization of media by journalists + TV as a political party financed by loyal ‘oligarchs’ + illegal mechanisms to ensure manipulative use of mass media (corruption, bribery, concealed advertising) ‘Oligarchization (1996-2000): structurization and redistribution of ownership among loyal business elite (NTV case) + growth of media-industrial conglomerates with low interest to media as business + rise and fall of advertising industry (1998) ‘De-Oligarchization/Etatization’ (since 2000): withdraw of ‘oligarchs’ from media industry + professionalization of media management + consolidation of financial resources (growth of advertising) + cross-media concentration (Gazprom media, Prof-media)


Russian Media Industry: Post-Industrial Realities: Russian Media Industry: Post-Industrial Realities Multiplication of channels: consequences of being private and digital Need for profits as a result of commercialization of content concepts (tabloidization, infotainment + …tainments) Emergence of leisure industries in which media holds the central role New actors that were silent in times of planned Soviet media economy play a role: advertising, technology, audiences


Advertising in Russian Media : Advertising in Russian Media


Structure of Russian Advertising Market in 2005 : Structure of Russian Advertising Market in 2005


Dreaming with BRIC: Dreaming with BRIC Brazil(11), Russia(7), India (6), China (8): the highest growth of advertising markets Rapid development of national economies and GDP Rapidly growing consumer sector + more positive attitude to advertising by audience


Advertising Expenditure in GDP, % (2004) : Advertising Expenditure in GDP, % (2004) China 1,57 USA 1,37 UK 0,98 Japan 0,85 Brazil 0,76 Germany 0,74 Russia 0,73 Italy 0,62 France 0,6 India 0,42 ZenithOptimedia


Consumers’ Profile in Russia: Consumers’ Profile in Russia Low spending to media and communication - about 1,4 % of family budgets 2000-2005: growth of consumer spending 257%, annual inflation rate - not more than 20% Core spending - food, housing, drinks+tobacco Growth of spending for drugs, transportation, entertainment


Advertising / Media Relations: Russian Case: Advertising / Media Relations: Russian Case Restriction for advertising in print media: 40% (Russian Mass Media Law) Strong presence of the state at the TV sector: the state broadcaster VGTRK got $ 300 mln. in 2004 as state subsidies (82,5% of all state money invested in the media sector) Oligopoly at the national TV advertising market: ‘Video International’ and ‘NTV-Media’ hold dominant position an selling advertising at the national level


Predictions?: Predictions? Predictions still impossible: media market is not self-sufficient Integration of Russia into WTO will change economic structures of Russian mass media Globalization will minimize ‘peculiarities’ of Russian media market