The Magazine Boom

The Russian magazine market is truly

booming: with one or two major new

national titles being unveiled every week, best estimates are that there are now

25-30,000 periodical publications of varying sizes in print. Some of this boom is

attributable to the influx and influence of

foreign magazine brands since the mid-1990s. But mostly it is simply the traditionally-strong Russian periodical market getting back on

its feet. “My impression, based on the turnover we see,” said Alexander Petrov, first deputy general director of DM Press, a top magazine wholesaler, “is that reading

newspapers and magazines comes second right after bread and milk.”

Russians have long prided themselves on being “the world’s best-read nation.” High literacy rates achieved during the Soviet era, together with the imperatives of mass propaganda, led to huge periodical and newspaper print runs. This applied not only to political tools like the news dailies Pravda or Izvestia, but also to thick literary journals, like Novy Mir, and popular magazines like Vokrug Sveta (“Around the World”). In fact, some publications were so popular that there were annual lotteries for the limited number of new subscriptions available. A typical scene in a Soviet office in early September would be a crowd of employees pulling small papers with publications’ names out of a fur hat—the lucky person who drew at least one “deficit” magazine was usually barred from further raffling.

In the early 1990s, Russia’s periodical market collapsed. State funding, which had subsidized massive print runs and tiny cover prices, dried up. Many magazines and newspapers could not survive, because subscribers could not afford what it really cost to publish these periodicals, and an advertising market was yet non-existent.

Meanwhile, for 70 years, the Russian magazine market had been operating in isolation. Foreign brands (except those of the fellow-traveler variety and a few notable exceptions, like the USIA-published Amerika Illustrated, the counterpart to Soviet Life, which had a very modest print run) were non-existent. What is more, Russia had missed out on seven decades of western magazine publishing experience (in everything from ad sales to subscription marketing to editorial specialization). Beginning in 1991, Russian publishers started playing “catch-up.” The progress was swift and widespread, interrupted only by the economic depression which followed the August 1998 ruble devaluation.

Andrei Yelyutin, editor of the magazine Avtozvuk, which covers auto sound systems, summed up the current situation well: “The magazine boom shows a growing interest in life in general. It is because of the long-term impact of glasnost and perestroika. In the past, we included very few things in our notion of life. So, for us, two TV channels, one newspaper and one magazine was enough to cover it all. Our magazine would have had no place in 1984, though we did have cars back then. And we did have radios in them. But this side of our life was so small that all the relevant information could have been fit into a matchbox: ‘get a radio in your car, it will make driving merrier.’ Period. Now, our readers are learning about so many aspects of life that they need much more information.”

Sex Sells

In the mid-1990s, as homegrown Russian magazines struggled to navigate the difficult waters of the new capitalist economy, the foreign invasion began. Internal convertibility of the ruble and loosening of import controls flooded the Russian market with western goods. And the manufacturers, importers and retailers of those goods needed a way to advertise them to the population.

The first important foreign magazine brands to enter Russia in this period were Cosmopolitan and Playboy, published by Dutch-owned Independent Media, which had cut its teeth in Russia with The Moscow Times, an English language daily newspaper. In 1994, when Cosmopolitan came to the market, the women’s magazine had no competitors. Today, less than a decade later, this niche already includes licensed versions of Elle, Marie-Claire, Vogue, L’Officiel and a host of second-tier fashion magazines. Independent Media has since added a range of other titles to its stable, including Russian versions of Men’s Health, Good Housekeeping, and FHM (For Him Magazine).

It was logical for the invasion to first target the “better half” of the Russian population. “Women are much more psychologically receptive to any socio-cultural event,” said Ruslan Tagiev, media director with Gallup Media, which keeps its pulse on the Russian magazine market, “suffice it to note the higher percentage of women in theaters, museums and cinemas.” Russian women also read more than Russian men.

But if the mid-1990s belonged to women’s magazines, the late 1990s saw the introduction of a whole slew of “men’s magazines,” including XXL, Andrei, and Russian versions of Men’s Health, GQ, Maxim and Esquire. By the turn of the century, attention was already focusing on special interest and business-to-business titles.

The result is that today, just ten years after the opening of the Russian market, virtually every major international magazine conglomerate has titles published here: Burda, Gruner+Jahr, Hachette-Filipacchi and Condé Nast are all licensing their titles into Russia. But, if these conglomerates can bring deep pockets and international publishing pedigrees to bear, they will only ever command a limited slice of the market. Russian-owned publications have already shown that they are learning fast from their foreign cousins, while sopping up the majority of the market.

Soviet Holdouts

Some of the most notable standouts in Russian magazine publishing today are special interest titles that were popular in the Soviet era, and which somehow survived the economic roller-coaster ride of the past decade. The popular car magazine Za Rulyom (“Behind the Wheel”) is one such magazine. In 1990, the magazine could not keep up with demand, and it was often a hot title in subscription raffles. Today, the magazine has been revived and improved, and its 300 pages are chock-full of glossy advertisements for everything from cigarettes to motor oil. The magazine’s success has bred a slew of competitors, including Avtomir, Formula 1, Avtopilot, Automobiles, Moto, Avtopanorama, Motor, Pyatoe Koleso (5th Wheel), Avtosport, Limousine and Klaxon.

Another successfully revived Soviet magazine (actually, pre-Soviet, as the magazine was founded in the late 19th century) is Vokrug Sveta, which Tagiev said “is now witnessing a terrific success,” largely thanks to wise investments in television advertising.

Alexander Perevozhchikov, editor-in-chief of Tekhnika Molodyozhi (“Technology for Youth”), another stalwart Soviet era magazine, recalls with a bit of nostalgia how, in the mid-1980s, his magazine had a print run of two million. And even so, the drab, text-heavy magazine for do-it-yourself techies was hard to find. “Try to pull-out a sub to Tekhnika Molodyozhi for me,” Soviet teens would plead to their magazine auction-bound parents.

“Our magazine,” Perevozhchikov said, “lived through whatever all similar magazines lived through, the difference being that some, toward the end of perestroika, lost their print runs and ended up with just a few thousand copies, while others realized the need to diversify into different magazines. … The toughest year was 1992, when I had received money from 600,000 subscribers, but, by April, we had zero rubles on our bank account, due to wild inflation. So I had to decide how I was going to pay my subscribers back.

“Tekhnika Molodyozhy was one of the rare magazines that wrote about weapons; we knew this topic. ... So I told our guys: ‘OK, there is no money to produce Tekhnika Molodyozhy for now, so we will do a magazine which will be bought up immediately. So, we published the magazine Oruzhiye (“Weapon”) in one month. And I am still publishing it today. We wrote about modern arms, historical arms, criminal arms, arms held in criminal museums, etc. It was such a new niche that the entire print run was snapped up and there was nothing left for subscriptions … Thus we solved the money problem …” Perevozchikov has since gone on to publish a range of special interest magazines, including a skiing magazine and several other military-related titles.

The general trend in Russia’s magazine business confirms Perevozchikov’s approach: the market is getting increasingly segmented and specialized. “The number of publications keeps growing,” said Tagiev. “Six years ago, a publisher I knew was asked: ‘Whom are you publishing for?’ And he said: ‘For all who can read.’ We believe those times are gone.”

In addition to specialized auto magazines, there is an increasingly diverse range of magazines about computers (Hacker, Mir PC, Computer at Home, Upgrade, Podvodnaya Lodka-“Submarine,” Hard’n’Soft), the internet (Internet, Mir Internet), photography (Foto & Video, Fotomagazin), and mobile phones (Russian Mobile). There is even now the eponymous magazine DVD. The fact that all are mostly advertising-supported (and not subscription or retail-sales supported) titles attests to the growing diversity and complexity of the Russian consumer goods market.

Nikolai Efremov, editor-in-chief of Salon Audio & Video, a 40,000 circulation monthly published since 1996, said his publication “was not conceived as just a Buyer’s Guide—i.e. to help people buy audio or video products. We wanted readers to store the magazines for the future, so we decided to offer analysis of equipment so that the reader could make choices according to his taste … our magazine is in between a reference tool and a buyer’s guide…” But, Efremov said, unlike his foreign-financed competitors (Stereo & Video and Hi-Fi Music), he does not shy from writing about Russian electronics. This is a particularly important editorial choice. Russians are faced with a flood of western brands in everything from foodstuffs to automobiles, and are increasingly asking: “What about our brands?”

Now the Hard Part

Continued growth of both specialized and general interest magazine titles is, however, hampered by a not-insignificant problem: Russia’s mail delivery system is completely unreliable. This makes it nearly impossible to develop a stable subscriber base for any size publication, stunting the growth of specialized media that would rather satisfy the interests of subscribers than those of advertising clients.

Whereas delivery of magazines by mail worked decently well in the Soviet era, today, as Efremov explained, Russians “no longer trust our mail. Mail boxes in apartment foyers get broken into and some people have to go to pick up their periodicals at the post office, which is an inconvenience. Besides, people no longer feel secure about paying money up front for subscriptions, which means, of course, that publishers don’t have this ‘free money’ to work with.”

Avtozvuk Editor-in-Chief Yelyutin concurred: “We have done our best to make the subscription mechanism user-friendly: you can subscribe at the post office, at the editorial office, or via the internet. But delivery is very slow, plus people break into mail boxes. So the reader regrets not so much his money, but rather his reputation. For example, a reader gets to work and his colleagues ask him, ‘So, have you read the latest Avtozvuk?’ And he must reply, ‘No, I am waiting for my subscription copy.’ ‘OK, keep waiting,’ his friends say, ‘meanwhile we will read it.’ So he feels rather stupid ... Frankly, it is hard for me to fathom how one could have ‘succeeded’ in ruining such a tried and true thing as Russia’s subscription system. It is actually a rather recent thing. It is some sort of fundamental shortcoming, it seems to me. Road building is on the mend, trade is resurrected, etc. But no one trusts the mail any longer.”

As might be expected, Russian ingenuity has developed a response to this problem: readers unite in “reading pools.” As Yelyutin explained, “each person buys a specific magazine and then they share their copies. Because, mind you, the equation is simple: one R40 copy of Avtozvuk equals two bottles of beer. Thus, Russians unite in reading pools. It is a purely Russian phenomenon, and it seems to me it reflects Russian collectivism. Quite often these are colleagues at work.” The practice is more widespread in the regions, where there are even fewer copies of magazines to go around.

Do the Math

Creating just the right printed product for a specific niche is just the tip of the publishing iceberg. The product still has to get to the readers in that niche. And, in the absence of reliable direct mail via the post office, retail sales is the only avenue.

“Selling the very first issue of a new magazine is much easier than selling the second,” cautioned Alexander Petrov, first deputy general director of DM Press, one of Russia’s top wholesalers. “The first issue attracts readers by its novelty. But by the second issue there is an audience, and they want further proof of quality. As a rule, the second, third and fourth issues will be a litmus test and will show how successful a new publication will be.”

DM Press, which currently sells over 700 titles through its nationwide distribution network, encourages new publishers to promote their titles not just to DM’s clients—the retailers and street sellers—but also to the reading public more widely, via radio, TV and outdoor ads.

In the United States, magazine publishers sell their magazines on consignment through distributors and wholesalers. Publishers put their magazines on sale in bookstores and on newsstands, and must accept any and all returns of magazines for full credit, often for up to a year after publication. Russia’s current system is somewhat different. New magazines must agree to a 100% “write-off” (spisanie) of their title until they are “established,” at which point they can renegotiate with their distributors to have a progressively lower spisanie. Successful magazines can get a spisanie of 10%, meaning they will be guaranteed payment for at least 90% of the magazines they deliver—a figure American publishers could only dream of, since the average sell-through of magazines in the US is usually 40-50%.

Dress for Success

So what is it that makes a truly successful magazine in Russia? Opinions differ, but despite some local specifics, the Russian magazine market obeys rules of magazine publishing that apply the world over. Salon Audio &Video’s Efremov said the main thing “is to put oneself in the shoes of the reader. The biggest delusion is that, if you like your magazine and your friends and entourage like it, that’s enough. No. This is only good enough for a print run of 1,500.”

Valery Oskin, deputy director general at Kontakt recruiting agency, sarcastically mimicked the would-be magazine publisher: “Why do any research?! Isn’t it all clear as it is?! Here is my friend, here is my other friend, they have an interest in this new publication … I have lots of friends—like a hundred. I asked them all, they say, ‘We like it, it is interesting,’ so why spend money on research? I feel it will go fine as it is. I have on my record so many other successful businesses, why would I fail in this new publishing project?!”

“To make a good magazine,” said Gallup’s Tagiev, “takes a good team to produce the magazine … so, a good team, the right marketing, work with distributors, and the right advertising campaign, because one can waste monstrous quantities of money on this without any tangible results … Then you must have a clear-cut understanding of who the target audience is and, finally, some luck. Of course, if you have behind you a powerful publishing house which can help with photos and editorial, it makes things easier. And the brand plays a role as well, because if you build a brand in Russia, you refer to the West. Though the example of Karavan Istory magazine [see box, page 59] shows that one can create a magazine brand from scratch here.”

Oskin said that Josef Stalin’s famous formula, “The cadres are decisive” applies to the magazine business as well. Yet, both he and his colleague at Kontakt, Svetlana Golovatyuk, head of the Media Industry Recruitment department, noted that too many entrepreneurs forget this maxim, somehow thinking that magazines are different. “In publishing,” Golovatyuk said, “there are people who see a new publication and think: oh, it is a hiccup of the past so it was surely done with state money, or it was set up to lobby someone’s interests, or that someone set it all up for his journalist-relative so that he could earn some money ... We actually do see a lot of this among Russian publishing houses ... For Russian publishing houses or new media are often launched as a spin-off, additional business from some other type of business …” Kontakt research showed that 60% of employers in the Moscow media market still use personal contacts (svyazi) as their primary form of staff recruitment.

Western publishers are much more serious about their new launches and personnel recruitment policies, Golovatyuk said. “.. They have a business plan, they know who to hire, for how much, what is the break-even period ... But if we speak about new Russian publishing projects, then a good professional will be very scared to join it, because it is not clear how they make their calculations, which research they conducted before launching the publication, what is the target audience, etc. Quite often, a Russian publishing house will have already done something, say printed two issues, and then they think: ‘Oops, maybe we need to increase the print run now, maybe we need to increase ad sales, but then to achieve it we need to increase circulation.’ This, instead of doing the right research, the right way.” The situation will improve, Golovatyuk said, only when Russian general directors of publishing houses start regarding their publications as a normal commercial project obeying normal corporate laws.

Yulia Vasilieva, editor in chief of the western-financed Gala (see box, page 58), said her magazine hires only the best people, yet she is always hungry for even better employees. “People who work on the Gala team are those who have expertise working in Western publications, but also some who have worked in Russian publications, yet also worked successfully. They all have higher education. Most speak foreign languages, because, without a foreign language, they can’t work here, since we process huge volumes of information in search of an interesting idea.”

Filling Pages

But, in the end, it all comes back to ads. Without a growing base of advertising clients, there would not be a Russian magazine boom. “Over the last two years, the economy has been up,” Tagiev said. “The magazine boom is possible only when this is so, as the absolute majority of publishers have ad sales as an important, basic source of revenues. A boom in the magazine business is possible only when manufacturers produce and sell enough goods and realize they need to advertise them ... The magazine boom in Russia is a mirror of the fact that, right now, manufacturers feel quite bullish and thus must be expressing this optimism to editors-in-chief and presidents of publishing houses, who in turn think of new projects.”

Still, Yuri Fedutinov, director of Maxima ad agency, cautioned that “any advertiser is wary and cautious with new publications. He will wait and see what happens to this new publication. It is the readers who are attracted by and interested in new things, not so with advertisers.”

Fedutinov said that, both in terms of turnover, and number of clients, 2001 was considered by many to be “the first post-crisis year—not chronologically, but in terms of purchasing power.”  Yet while 2001 marked a huge rebound in advertising and magazine publishing, Fedutinov said he expects the trend to continue in 2002, just not on the same scale.

Tatyana Vasyuk, advertising and PR director with Gruner+Jahr, agreed. And this may lead advertisers to increase their per-page prices. “Prices for ads will go up,” Vasyuk said. “We raised our ad prices for GEO. For Gala it’s still too early to tell. But we will raise ad prices there too. The market shows that one can raise prices …”

Jeans of a New Type

Sometimes ads are just not enough. Sometimes advertisers ask for a bit more. And in a fast-moving market where rules are made up on the fly and everyone is trying to take the lead in their market niche, the ground is fertile for less-than-perfect professional practices.

In the western publishing world, it is common to talk about a “wall” separating “church and state,” or advertising and editorial. It is considered journalistically unethical to allow advertisers to influence editorial, or to allow editorial coverage to be tainted by the wishes of advertisers. And yet, plenty of influence peddling goes on and publishers often soften or shift their coverage so as not to ruffle the feathers of influential advertisers. Yes, the wall is usually there, but there are also plenty of bricks missing and plenty of hidden tunnels connecting the two sides.

In Russia, which has a long history of state interference in the media, the wall between advertising and editorial is only beginning to be laid. “Bought and paid for” articles (commonly termed dzhinsa, literally “jeans”) are common and lead to considerable distrust and cynicism about the news media. In principle, editors are supposed to catch “advertorials” masquerading as news articles, but it is  a delicate dance. Advertisers in Russia, as everywhere, like to have what is euphemistically called here “informational support”—from coverage of openings and new products, to profiles of company executives.

So how do upstanding publishers navigate this morass without jeopardizing the bottom line? How does a magazine objectively review, say, a new amplifier put out by one of it’s advertisers? Salon Audio & Video’s Efremov admits that “it is indeed a problem. That is why our editors work in physical separation from the companies they write about. For example, we get samples of electronics from retail stores, rather than from the companies … Some advertisers are convinced it would be better to pay a journalist $200 directly rather than pay $2,000 for a display ad. So I tell our editors: ‘Write the truth.’ And then the stage of diplomacy begins [rewriting a negative review so as not to make it too harsh]. Because it is a sticky wicket: how not to lose readers and yet, at the same time, keep the advertisers.”

It’s all About the Angle

Yet, not all articles about advertisers should be interpreted as bought and paid for. Gala’s Vasilieva said “it all depends on the angle. Because the people who do business [advertisers] are interesting people. So why not write about them? For example, we had a very good editorial project which resulted in an article “A Fashionable Address.” They opened the Tretyakov project—it is a street full of boutiques, the Russian version of France’s avenue Montaigne or New York’s Fifth Avenue—the concentration of the world’s best boutiques. So, in fact, it was an advertising article. But we did it deliberately, knowing that it could be interpreted as such. But it became a travel guide type of article—we gave the street’s history, we showed the roots, then talked about the people who had the idea of carrying out the project, and then we moved to the story about stores and shops.” Vasilieva’s colleague at Gala, Tatyana Vasyuk, added, “We never write stories about our advertisers if there is nothing to write about editorially. We do communicate with our clients, but there has to be some news-related event to write about.”

The Future

Russia’s magazine boom is only beginning. A colorful reflection of economic revival, it is also a reflection of Russia’s love for the printed word. Until now, the fruits of the boom have been largely limited to the capital. But that will change as distribution networks become more sophisticated and profitable. And the range of magazines on the market will only continue to diversify.

Kontakt agency’s Golovatyuk said that she can feel the boom. “I don’t think it has reached its peak. The market won’t absorb and accept all new publications. This doesn’t mean, however, that there won’t be a boom. It has become en vogue now to open new publications, so people will keep launching new publications anyway.”

Tagiev concurred. “There are still magazines to come over here. But today everything is much more serious. In any case, it has been a while since I have heard about odd projects; it has become more professional. The publishing business in Russia is still profitable. But the farther it develops, the tougher it is going to be, the fewer empty niches there will be in the market, the tougher it will be with distributors and ratings. And with finding the reader—after all, his head is not made of rubber. He will not buy more than his usual 3-5 magazines; he will not buy 20 magazines … but then one can try to get him to change the magazine he is reading.”

Maxima’s Fedutinov said he observes the potential for growth to be in the regions. “In the US,” he said, “TV Guide, as far as I know, has a print run of 14 million. So why does our TV guide 7 Days have only 700,000? [1 million at press time]. This regional expansion ... we are just witnessing its beginning. In any case, people are finally realizing that one needs to think beyond Moscow. Look at how mobile phones are expanding like crazy into the regions ... Other products will expand there as well—construction, cars, etc. So money and investment will come there. As soon as it happens, the print media will also expand into the regions ... For it seems to me that Moscow at present is saturated.”

“The Russian mind is alive and inquisitive,” Yulia Vasilieva said. “Because, for a time, it seemed as if our people sort of faded, and the youth too. But now this splash of interest for good quality printed products ... is a very positive thing which makes one believe in a bright future. And I feel not only is all not lost, but we still have everything ahead of us. Such a hunger for information is good.” RL