Status and Development Prospects of the Russian Media

Public affairs office of Federal Agency on Press and Mass Communications of the Russian Federation (Rospechat) elaborated and published several reports on status and development prospects of the Russian media. The most deplorable situation is in a printed press industry.

From 2004 to present, the number of newsstands in Russia decreased by 31.5% - from 42,000 to 28,900 units. The Russian printed press has lost about 60% of advertising market because of legislative initiatives and restrictions accepted in the past 2.5 years. Last March the state subsidy for subscription delivery was abolished, as a result, in the second half of 2014 a subscription circulation of newspapers and magazines national average dropped 20.2% and in the first half of 2015 - 22% (data of Federal State Unitary Enterprise "Russian Post"). In particular regions of the Russian Federation, the fall has exceeded 100%. Retail revenue of printed press remained approximately at the level of 2013, but only at the expense of price increase that was around 20% during the year.

It is noteworthy, that fewer number of media channels is enough for modern Russian citizen to get information.  According to a study RosIndex held by Synovate Comcon company, share of people who are limited to one or two media channels is growing: in the first half of 2014, it was 38.3%, showing a growth of 5.4% as compared to the previous year, while the national average is about three media channels per person. 

As shown in Figure 1, most readers choose printed versions of newspapers. It is confirmed by results of the last study held by Russian Public Opinion Research Center: 73% of adult population of Russia are not ready to completely refuse printed press in favor of e-media, and 51% of audience will always choose print media.

There are some positive tendencies in the Russian press market. Annual competition "Sales Leader" by Press Distributors Association (PDA) identified several dozen newspapers and magazines that successfully sold out their circulations, and their revenues grew in 2013-2014.

TOP 10 Russian publishers by total audience of newspapers  AIR, thous. people, % of population, 2014 

Publishers	2013			2014
	thous. people	%	No of ed.	thous. people	%	No of ed.
Komsomolskaya Pravda	10 780.7	17.9	5	8 675.8	14.3	4
Argumenty i Fakty	7 074.4	11.8	3	6 168.9	10.2	3
Bauer Media	6 277.1	10.4	3	5 100.5	8.4	3
Moskovskiy Komsomolets	3 807.0	6.3	3	2 922.3	4.8	3
Metro	2 436.2	4.0	2	2 384.7	3.9	2
Press-Courier	2 038.8	3.4	2	1 937.6	3.2	2
Media Mir	1 618.6	2.7	1	1 419.7	2.3	1
Rossiyskaya Gazeta	966.8	1.6	1	834.2	1.4	1
Klaxon	978.2	1.6	1	829.5	1.4	1
Za Rulem	1 025.0	1.7	1	822.2	1.4	1

Source: TNS Russia, NRS, May - October 2013 May - October 2014

Average Issue Readership (AIR)* – average readership of all editions of publishers in cities with population 100 000+, at the age of 16+ (100 000+, 16+)

There are also examples of publishers that meticulously sell content and attract advertising for both - electronic and printed editions. Moreover, Russian newspapers extensively use symbology of e-media: there are such concepts as hashtags, geotags and QR-codes.

Rating of websites of news media that have federal printed versions, December 2014

№	Site name	The audience of the site (‘000 people)
1.	Kp.ru («KomsomolskayaPravda»)	11 964. 0
2.	Rg.ru («RossiyskayaGazeta»)	11 559.0
3.	Aif.ru («ArgumentyiFakty»)	8 503.0
4.	Forbes.ru («ForbesRussia», magazine)	5 603.0
5.	Mk.ru («MoskovskiyKomsomolets»)	5 393.0
6.	Koinmersaut.ru («Kommersant»)	4 793.0
7.	Yedomosti.ru («Vedomosti»)	4 755.0
8.	Izvestia.ru («Izvestiya»)	2 693.0
9.	Dp.ru («DelovoiPetersburg»)	1 450.0
10.	Rbcdaily.ru «RBCdaily»	868.0

Source: TXS Web Index, Russia 0+, 12-64 years old

We can see a picture of multidirectional dynamics of circulation in the leading Russian newspapers at year-end 2014. There are examples of decrease, stability, and even growth. Circulation of Russian national weekly newspapers ("AIF" and "KP" (W)) over the past year decreased by 5% and 7%, respectively. As single circulation of these editions hovers around 2,000,000 copies, this reduction is not critical, including in terms of advertising effectiveness. Editions with smaller circulation - such losses for them are much more tangible.

Leading daily newspapers by Average Issue Readership (AIR, Russia)*

№	Name of publication	2013		2014
		thous. people	%	thous. people	%
1	Metro (Daily)	1 882.0	3.1	1 788.2	3.0
2	Rossiyskaya Gazeta	966.80	1.6	834.2	1.4
3	Moskovskiy Komsomolets	1 068.9	1.8	788.1	1.3
4	Sport-Express	440.90	0.7	354.0	0.6
5	Sovetskiy Sport	473.20	0.8	348.8	0.6
6	Izvestiya	277.40	0.5	291.6	0.5
7	Kommersant	261.50	0.4	200.5	0.3
8	Vedomosti	143.40	0.2	166.4	0.3
9	RBC (newspaper)	-	-	152.4	0.3

Source: TNS Russia. NRS, May - October 2013 / May - October 2014

A significant segment of print media is free newspapers. According to TNS Russia, daily audience of Metro newspaper in St. Petersburg in 2014 increased by almost 16,000 people and was 730,400 readers. Indicators of Metro newspaper in Moscow even more impressive - in the fourth quarter of 2014 it increased its average daily circulation by 15%, it corresponds to the growth dynamics of advertising revenues of the edition. Next in TOP 3 are "Rossiyskaya Gazeta" and "Moskovskiy Komsomolets."

Leading daily newspapers by Average Issue Readership (AIR, Moscow)*

№	Name of publication	2013		2014
		thous. people	%	thous. people	%
1	Metro	1177.5	11.7	1068.9	10.4
2	Moskovskiy Komsomolets	644.8	6.4	511.9	5.0
3	Rossiyskaya Gazeta	152.6	1.5	147.1	1.4
4	Sport-Express	157.3	1.6	126.3	1.2
5	SovetskiySport	198.8	2.0	116.0	1.1
6	Vedomosti	106.8	1.1	107.0	1.0
7	RBC (newspaper)	112.9	1.1	105.8	1.0
8	Kommersant	121.4	1.2	96.7	0.9
9	Izvestiya	105.1	1.0	91.0	0.9
10	The Moscow Times	21.1	0.2	33.1	0.3

* Daily newspaper «Komsomolskaya Pravda» is not involved in the project of TNS

Source: TNS Russia. NRS, May - October 2013 / May - October 2014

However, the main advantage of free newspapers in the old days - context advertising (PPC advertising) has almost completely relocated to the Internet.  Other advertising market falls, too, so there are great challenges ahead for all free newspapers during crisis. On the one hand, these newspapers should be in more demand among people, but then there is a problem of survival in the conditions of contraction of advertising market, on which many free newspapers depend on more than 90%.

Among regional editions, a multimedia project of updated newspaper “Vechernyaya Moskva” is rather successfully developing with the support of the Moscow City Government. This project could become self-sufficient by 2017. According to TNS Russia, at the moment, “Vechernyaya Moskva” has the highest growth dynamics of the number of advertisers and advertising volume in the capital market.

Regional newspapers form a huge segment of the newspaper market. Almost in every region of Russia, the most cited media (Top 10 of "Medialogia" company) includes at least two or three local newspapers. Some of them have state support. In 2014, a total of 215 social projects in regional and local editions had state support of 49.6 million rubles. However, this assistance could not compensate for the subscription losses of regional press because of the small amount of allocated funds.

At the same time, there are several success stories of socio-political regional and local newspapers that are economically independent and free in their editorial policy.

Leading weekly and monthly newspapers by Average Issue Readership (AIR, Russia)

№	Name of publication	2013		2014
		thous. people	%	thous. people	%
1	Argumenty i Fakty	6 393.2	10.6	5 538.5	9.1
2	Komsomolskaya Pravda (w)	5 325.7	8.9	4 528.9	7.5
3	TV Program	4 479.6	7.4	3 826.3	6.3
4	777	4 161.0	6.9	3 277.8	5.4
5	Orakul	2 188.0	3.6	1 802.8	3.0
6	My Family	1 618.6	2.7	1 419.7	2.3
7	MC plus TV	1 682.5	2.8	1 250.2	2.1
8	1000 Secrets	1 321.1	2.2	1 241.0	2.0
9	MK-Regnon	1 497.8	2.5	1 182.1	2.0
10	Express newspaper	1 240.2	2.1	983.1	1.6

Source: TNS Russia. NRS, May - October 2013 / May - October 2014

In 2014, there was a number of losses by historic Russian media. "Trud" newspaper declared itself bankrupt, though it is still printed as a weekly newspaper. The last issue of “The St. Petersburg Times” newspaper was published on December 24th, 2014, and now there are only a few English-language newspapers in Russia. You can’t buy them even at Sheremetyevo and Domodedovo international airports, although, for example, there are not only dozens of newspapers in different languages (from Japanese to Albanian) at the airport in Rome, but also impressive range of Russian press - "Argumenty i Fakty", "Komsomolskaya Pravda", "Rossiyskaya Gazeta", "Nezavisimaya Gazeta" "Kommersant", "Literaturnaya Gazeta", "Pravda".

Magazine market looks more lively. According to Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications (Roskomnadzor), at year-end 2014, there were 31,714 officially registered magazine titles in the Russian Federation. During 2014, 1169 of them were closed, but 1960 new magazines were opened (i.e., the total number of editions increased by 791). TNS Russia evaluates the audience of Top 20 leading Russian magazine publishers at 100 million people.

TOP 20 Publishers by total audience of magazines (AIR*, Russia)

№	Publishers	2013		2014
		thous. people	%	thous. people	%
1	Burda	17 848.8	29.7	16 045.3	26.5
2	Hearst Shkulev Media	13 505.0	22.4	11 800.2	19.5
3	Sanorna Independent Media	11 630.3	19.3	10 442.0	17.2
4	7 Days	7 872.2	13.1	6 850.4	11.3
5	ZaRulem	7 732.0	12.9	6 487.6	10.7
6	Bauer Media	7 515.4	12.5	6 308.1	10.4
7	Edipresse-Konliga	5 707.0	9.5	5 660.4	9.3
8	Toloka	5 411.3	9.0	5 237.8	8.6
9	Vokrug Sveta	4 396.4	7.3	4 033.1	6.7
10	Popular Press	4 467.0	7.4	3 965.3	6.5
11	Press-Courier	2 512.1	4.2	3 414.3	5.6
12	Axel Springer Russia	3 441.2	5.7	3 284.2	5.4
13	Zdorovye	2 899.2	4.8	2 322.7	3.8
14	Conde Nast	2 327.0	3.9	2 234.3	3.7
15	Bonnier Publications	2 386.7	4.0	2 175.3	3.6
16	Parlan Publishing	2 001.1	3.3	2 138.0	3.5
17	Forward Media Group	2 021.6	3.4	1 512.9	2.5
1$	Discovery	1 475.0	2.5	1 403.5	2.3
19	Afisha Industries	1 345.5	2.2	1 360.4	2.2
20	Moskovskiy Komsomolets	1 488.9	2.5	1 306.2	2.2

* AIR - total average audience of all editions of publishers in cities with population 100 000+, at the age of 16+ (100 000+, 16+)

Source: TXS Russia, NRS, May - October 2013 / May - October 2014

Just like newspapers, magazines actively develop online market, and many of them switch to digital versions.

Trend of magazines circulation is that it is gradually declining. The most popular Russian magazine in 2014 - "Antenna-Telesem", the Russian Audit Bureaux of Circulation evaluated its single circulation at 2,796,000 copies. For comparison, single circulation of Cosmopolitan – 768,000 copies, Maxim, Men'sHealth and Ogonek - 166,000, 142,000, and 91,700 copies, respectively.

TOP 20 monthly magazines according to Average Issue Readership, Russia

№	Publishers	2013		2014
		thous. people	%	thous. people	%
1	Za Rulem	7 170.6	11.9	6 108.3	10.1
2	Cosmopolitan	5 776.1	9.6	4 918.1	8.1
3	Vokrug Sveta	4 396.4	7.3	4 033.1	6.7
4	Karavan Istoriy	4 096.0	6.8	3 588.9	5.9
5	I Like Cooking!	3 319.6	5.5	3 003.4	5.0
б	Lubimaya Dacha	2 612.2	4.3	2 390.9	3.9
7	Zdorovye	2 350.9	3.9	2 322.7	3.8
8	National Geographic Russia	2 251.9	3.7	2 245.9	3.7
9	Burdа	2 411.4	4.0	2 170.9	3.6
10	Top Gear	1 898.5	3.2	2 038.4	3.4
11	KaravanIstoriy Collection	1 922.7	3.2	1 807.1	3.0
12	Maxim	1 981.0	3.3	1 591.0	2.6
13	Eden of Your Home	1 591.1	2.6	1 588.7	2.6
14	Domashniy Ochag	1 768.5	2.9	1 496.6	2.5
15	Domashny Doktor	1 537.4	2.6	1 475.7	2.4
16	Lisa Dobrye Sovety	1 985.5	3.3	1 474.1	2.4
17	Discovery	1 475.0	2.5	1 403.5	2.3
18	Popular Mechanics	1 336.4	2.2	1 298.3	2.1
19	Glamour	1 365.6	2.3	1 264.6	2.1
20	Lisa Horoscope	1 241.9	2.1	1 193.4	2.0

Source: TNS Russia, NRS, May - October 2013 / May - October 2014

The situation with printed advertising leaves much to be desired. In 2014, advertising revenue of the print media market was less than 39 billion rubles, i.e. compared to 2013, revenue fell by 11%. Following the results of the first quarter of 2015, according to the Russian Association of Communication Agencies (RACA or ACAR), advertising revenues of print media decreased more than 40%.

However, there are no significant changes in the structure of revenues of "Rossiyskaya Gazeta" in 2014. Compared to 2013, the share of advertising revenues decreased by 1% and was 81%. The remaining 19% are revenues from retail and a subscription to a printed version and a subscription to an electronic version of "RG". The share of advertising revenues for a printed version fell to 87%, while the share of revenues from ad on the website, on the contrary, increased to 13%. The overall decline in advertising income for the past year was 9.6%, which is in line with the pace of decline rate in advertising revenues of the Russian print media in 2014. The share of advertising revenues for an electronic version of "RG" decreased by 13%, for weekly newspaper "RG-Week" - almost by 20%. While advertising revenues of Rg.ru website increased by 20%. Nevertheless, this could not compensate for the loss of advertising revenues for printed versions.

 

One of the main problems for the magazine segment in Russia is the lack of market transparency for advertisers, however, this also applies to newspaper segment. In the experts eyes, this is almost the major factor for the drop of advertising revenues of magazines, which was 11% in 2014. In the current year, magazines may lose up to 30-35% of advertising.

 

At the same time, electronic editions will become increasingly popular among advertisers, advertising revenues in electronic magazines worldwide will be $13.4 billion in 2016, i.e. more than a quarter of total advertising revenues of magazines (27%), although in 2013 the share of electronic advertising was 17% ($8.4 billion).

 

According to the Analytical Center of Vi Company (ACVi), advertising volume in the Russian national press for October-December, 2014 decreased on average by 13.7% compared to the fourth quarter of 2013. At first glance, indicators are not that bad, especially taking into a sharp deterioration in economic environment that Russia saw that time. Comparing monthly earnings of the national press in 2014 with corresponding figures in 2013-2014, when advertising revenues were relatively stable, it is clear that the overall picture is much more worrying.

Dynamic of advertising revenues of the national press in 2014 compared to the average monthly numbers in 2011-2012

Jan.	Feb.	Mar.	Apr.	May	June	July	Aug.	Sept.	Oct.	Nov.	Dec.
-14%	-11%	15%	-15%	-22%	-22%	-23%	-21%	-17%	-24%	-31%	-30%

Sources: ACVi, TNS Media Intelligence  

Advertising revenues of the national press, 2013-2014, mln. RUB, without VAT

№	Type of edition	2013	2014	Dynamics, %
1.	Newspapers	6 118	5 455	-10,8%
2.	Magazines	16 568	14 686	-11,4%
3.	Advertising editions	2 463	1 645	-33,2%
4.	Total:	25 149	21 785	-13,4%

Sources: ACVi, TNS Media Intelligence

Last year saw no significant changes in the alignment of forces in advertising market of the national press.  The volume of advertising in advertising publications reduced just as quickly, weekly newspapers and magazines lost advertising much faster, than the daily newspapers and monthly magazines. The same trends were observed in 2013, but the decline in advertising was almost twice lower.

Advertising revenues of different media types of the national press, 2013-2014, mln. RUB, without VAT

№	Type of edition	2013	2014	Dynamics, %
1.	Daily newspapers	3 314	3 126	-5,7%
2.	Weekly newspapers	2 804	2 329	-16,9%
3.	Monthly magazines	10 702	10 794	-7,8%
4.	Weekly magazines	4 866	3 892	-20,0%
5.	Advertising editions	2 463	1 645	-33,2%
6.	Total:	25 149	21 785	-13,4%

Sources: ACVi, TNS Media Intelligence

Once huge market share of advertising editions in the national press fell to 7.6% in early 2015 (9.8% - in 2013), although in regions the number is much higher. The share of monthly magazines in advertising market of the national press increased and came close to 50%, by reducing the share of weekly editions.

Situation in publishing niches in 2014 repeated the picture of 2013, of course, taking into account the general deterioration of the situation. Revenues of women's magazines were displaced from a zone with some positive dynamic to a zone with moderate contraction of advertising. Dynamics of such major niches as TV guides and weekly mass newspapers deteriorated. Against the backdrop of general decline in advertising revenues, inflight magazines not only remained in positive territory, but also built up momentum of advertising revenues up to almost 15%, and this niche (there are only over a dozen magazines) moved up from 12th to 8th place in the leading publishing segments ranking. In addition to inflight magazines, "Gardening and Floriculture" segment was also a significant “plus”, but it is not that big. The largest contraction in advertising revenue, as it was in 2013, affected editions about computers, e-technology and tourism. The volume of advertising in "Entertainment guides", "Quality weekly newspapers", "Child care editions" segments declined with almost the same volume. Contraction in advertising revenues for business weekly was a record.

Advertising revenues of the national press editions by thematic niches, 2013-2014, mln. RUB, without VAT

№	Thematic niche of press	2013	2014	Dynamics, %
1.	Women's magazines	5 994	5 716	-4,6%
2.	TV guides	2 446	1 967	-19,6%
3.	Weekly newspapers (mass)	2 226	1 851	-16,9%
4.	Daily newspapers ("quality")	1 971	1 788	-9,3%
5.	Movies and celebrities	1 162	1 064	-8,5%
6.	Men's magazines	1 260	1 044	-17,1%
7.	Automobile editions	1 102	1 013	-8,1%
8.	Inflight magazines	780	896	+14,9%
9.	Free editions	954	856	-10,2%
10.	Interior, country-house	939	823	-12,6%
11.	Employment	989	790	-20,1%
12.	Business and socio-political magazines	1 009	684	-32,2%
13.	Daily newspapers (mass)	679	574	-15,4%
14.	Directories: construction, interior	579	399	-31,1
15.	Family, Child Care	403	314	-22,0
16.	Entertainment Guides	371	280	-24,6%
17.	Educational Publications	302	264	-12,7%
18.	Healthy Lifestyle	237	194	-18,2%
19.	Editions with free ads	287	183	-36,3%
20.	Gastronomic	187	170	-9,1%
21.	Automobile ad	260	148	-43,2%
22.	Young	187	139	-25,4%
23.	B2B	154	136	-11,7%
24.	Tourism and Travel	176	129	-26,5%
25.	Computer	148	109	-26.4%
26.	Weekly newspaper("quality")	140	104	-25,7%
27.	Crosswords & Entertainment	77	61	-20.7%
28.	Electronic equipment	103	53	-48,2%
29.	Gardening and Floriculture	27	34	+24,6%
30.	Total:	25 149	21 785	-13,4%

Sources: ACVi, TNS Media Intelligence

In 2014, volumes and shares of budgets of major product categories of advertisers was changed. The share of the 20 largest advertisers increased to 24.3%, while the share of the 20 largest publishers reached 86.3%.

Advertising budgets in the national press by product categories, 2013-2014, mln. RUB, without VAT

№	Product category	2013	2014	Dynamics, %
1.	Clothes, shoes, accessories	2 761	2848	+3,0%
2.	Perfumes and cosmetics	2 934	2 814	-4,0%
3.	Medicine, Drugs, Dietary Supplements	3 371	2 799	-17,0%
4.	Cars and Accessories	2 617	2 168	-17,0%
5.	Watches & Jewelry	1291	1428	+11,0%
6.	Finance and Insurance Services	1170	1187	+1,0%
7.	Real Estate	994	780	-21,0%
8.	Furniture and Furnishings	737	710	-4,0%
9.	Media and Special Events	785	680	-13,0%
10.	Food and Drink	666	580	-13,0%
11.	Construction Goods and Services	590	487	-18,0%
12.	Appliances	491	422	-14,0%
13.	Trade Organizations	394	373	-5,0%
14.	Tourism and Leisure	388	331	-15,0%
15.	Childen's Goods	355	304	-14,0%
16.	Computers, software	361	248	-31,0%
17.	Audio, Video, TV, Photo Equipment	190	129	-32,0%
18.	Sports Goods	141	128	-9,0%
19.	Mobile Phones	97	106	+9,0%
20.	Mobile Telecommunication Services	98	81	-18,0%
21.	Household Chemicals	114	68	-40,0%
22.	Alcohol Beverages and Beer	100	30	-70,0%
23.	Social Advertising	34	30	-12,0%
24.	Political Advertising	11	10	-5,0%
25.	Tobacco Products	621	0	-100,0%
26.	Others	1535	1359	-11,0%
27.	Classified	2 305	1685	-27,0%
28.	Total:	25 149	21 785	-13,4%

Sources: АCVi, TNS Media Intelligence  

The drop in advertising income of Top 20 publishing houses in 2014 was 11%, while for other publishers, it was even larger - 24%. Budgets of Top 20 advertisers did not declined, but even went up by 2%, while a total budget of Top 21-100 advertisers decreased by 3%, and budgets of Top 100+ - by 20%. In other words, a contraction of the volume of print media advertising market threatens small and medium-sized players first of all.
Press distribution market has its difficulties, too. Many regional distributors are experiencing economic difficulties, resulting in a reduction of sales points and the increasing debt in payment to the publishers for circulations. Publishers have to limit or even to stop the supply.
Particular problems of both federal and regional newspaper publishers are caused by a sharp rise of delivery tariffs by FSUE "Russian Post" in March 2014. As a result, subscription circulation for the second half of 2014 and the first half of 2015 across the country cumulatively decreased by more than 40%. Forecasts of market participants on the prospects of subscription range from moderately to deeply pessimistic.
Rapidly increasing prices for paper and printing services – are a huge problem.  Thus, if the current trends in the economy continue, rapidly increasing prices for printed media are only a matter of time.
To summarize the report, the following main reasons for the drop of the Russian market of print media can be highlighted:
1.  Legislative initiatives in the last year and a half;
2. Depreciation of the Russian ruble against foreign currency, as a consequence - increasing prices of printing process;
3. Cancellation of state subsidies, in particular for the delivery of subscriptions;
4. Competition from web-based media.
Based on the current situation, the report proposed a set of measures to support the print media market, that would allow to increase incomes fast enough and to reduce costs of the organizations producing and selling print media, and eventually to support the print media market.  Some of these measures are already being implemented.  
Source: adindex.ru