GlasNews 4.1.1 - Spring 1994 - Marketing

MEDIA AND THE MARKETPLACE

The answer isn't money - it's expertise

The publication of We/Mbl was abruptly suspended in the winter of 1994 after two years of operation. But Hearst has begun publishing a Russian edition of Cosmopolitan, and there are reports that another group may start up a new international publication for Central and Eastern Europe.

In his Washington office, freshly returned from a reporting trip to the Middle East, Wallach reflects on the future course of East-West media cooperation:

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Newspaper reporters, editors and publishers have a more important role in the current circumstances than they've ever had, because the bloom is really off the Russian rose. People are more skeptical than they ever have been, not only about the prospect of peaceful, orderly change, but more important, about conducting business in a safe, secure environment.

Things like the latest car bombing of a LogoVAZ executive ... have an impact in this country that I believe is devastating. It is not that Moscow or Russia has more crime than the United States or New York -- much less. When you're there you can certainly conduct business in a relatively safe environment, but that kind of incident gets tremendous press coverage here.... And it instills a lot of fear among people about doing business.

For example ... in New York, in our executive headquarters ... they were upset about the demise of We because it was a wonderful product, but the main feeling was one of resignation: that we tried, but you just can't do business successfully in that environment. So I think that while a lot of business continues to be done, there is a need for the kind of bridge-building that only the media can do.... And I just think there has to be many more exchanges that build confidence and trust between organizations.

A case in point: I put on a jazz and Broadway pop show last July 4th in Moscow, and we gave Ostankino exclusive rights to broadcast the show in Russia. We didn't charge them for the rights, and the understanding was that they would not charge us for their costs in taping it.

We waited. For six months after the show, we heard absolutely nothing. Nobody knew where the tapes were, nobody knew if the program was going to go on the air.... In the meantime we lost tremendous opportunities for CNN and others who wanted to air just little pieces of it, to get some promotion for the performers in this country. Nobody was talking about making any money on it, but after their very successful trip over there, the performers wanted to get some PR back here in the States....

Finally -- and this is, I think, such a typically Russian example -- when Clinton was in Moscow (in January), they aired the show on the last night of his visit. It was *extremely* professionally done. It was as well-done as any American network could do: wonderful graphics, wonderful interviews, a great 1 1/2-hour show....

Q: Did you know about it in advance?

We found out about two or three days ahead of time. But the point was that it was just an extraordinarily painful experience, not to know what happened, not to know when it was being scheduled, not to have anybody to work with.... And all of that has got to be consigned to the trash heap of the previous Communist bureaucracy. There's got to be a new page turned in which we can deal on a level of trust and confidence.

Another example is the way that Izvestia pulled out of We/Mbl. They pulled out without paying any attention to the contract we had with them that said they had to give us 60 days notice. They pulled out literally from one day to the next. They told us on a Tuesday that the issue that was coming out the next week would be the last issue, and that was it. And this is terribly important: There was no effort made to try to alert the advertisers. We had a quarter of a million dollars in advertising that was due us ... and we couldn't go around and collect those bills, because if you conduct business that way and an advertiser knows the publication doesn't exist anymore, why should they pay their bills from the last two months or three months? Not to mention the new advertisers that we had lined up....

At the very least we should have had a soft landing over a period of, say, two months in which we could have gone to the advertisers and collected some of the past-due bills that were owed us....

Over the course of We/Mbl, I sold over a million dollars worth of advertising. In the same period the Russians sold a total of $40,000 worth of advertising. There was no understanding of the job's importance or the need to do it. Now, this is not their fault, because they haven't been trained to do this.

The crying need today is not the editorial operation. They have wonderful reporters.... The writing is frequently better than in most American newspapers. It's a different style, but from a literary point of view, it's better than our writing. Their investigative skills have become extraordinarily well-honed, they've broken all sorts of important stories. But the other side of it is just a vacuum. They have had no experience in selling advertising and dealing with clients.

And distribution: We fell afoul of this horrendous distribution system, where we weren't allowed to have kiosks of our own. We were dependent on ... the old state distribution system, which had been privatized but wanted to be paid off.... And similarly, we couldn't have kiosks, because if you had kiosks you would have to have armed guards for the kiosks, or you had to pay off the mafia. So how are you supposed to operate in that kind of climate?

These are terribly important things that cut to the heart of whether there's really going to be the kind of cooperation in the future that will lead to success.

Q: And it's going to take more than getting a lot of people together, sitting down and realizing that we're not so different after all.

Absolutely. The crying need is for practical business conferences: advertising people, sales people, distribution people, PR people. The editorial is the easiest part -- you and I and all of us on the creative end. There are so many gifted writers there.... God knows, that's not the issue. The issue is how to design a marketable commodity, and then market it so that it succeeds in the marketplace. And when you have the kind of chaos you have over there economically, with hyperinflation, crime and everything else, you've got two strikes against you.

Q: The problem is that it's the whole culture. There's not just one thing that needs fixing....

And unfortunately there are still a lot of people who, through no fault of their own, grew up in the Communist system and are in the habit of thinking that Big Daddy is going to take care of everything: that somehow there's going to be a state up there somewhere or a party up there somewhere who is going to subsidize them, or is going to get them advertising, or is going to pay their salaries, or is going to do something so they don't have to do it for themselves.

That kind of psychosis still exists over there. Not among the people in their 20s and their early 30s, the beginning of the next generation. There are some extraordinarily talented people.

I'll give you another example of something that I think is just devastating. Radio stations are not allowed to have their own transmitters. They're not allowed to have their own transmitters independent of the government. So you still are in a situation in Russia where if the government wants to put everybody off the air they can flick a couple of switches and everybody's off the air. That is not press freedom as we understand it.

(It can be frustrating to do business) even when you have a station like Open Radio, which is a wonderful success story because it's basically a bunch of kids who put it together.

They had an idea to use the BBC World Service, the Voice of America and Radio Liberty. People could only get these broadcasts off shortwave, but they were highly listened to, very popular.... So Open Radio went to these outfits and said, "Pay us X amount of money (I think it was $60,000 or $80,000 a year) and we will broadcast your services on AM radio so people can get them in their cars and everywhere else. They don't have to depend on shortwave."

They built up a good business that way, and they bought their own transmitter, and they started getting a lot of advertising. It was the first all-news radio station in Moscow...

For the first year they were in operation, the government charged them $2,000 a month to use their own transmitter. They put in their own transmitter, but they're not allowed to use it unless the government flicks a switch.... Then the government suddenly increased that charge to $20,000 a month. So over a year they have a quarter-million-dollar bill that they have to pay to the government before they can make any money, pay salaries or anything else....

So this is the kind of thing that is extremely discouraging to somebody here who may be thinking of putting some real money into opening a radio or television station or anything else.

Q: So is Open Radio still in business?

Yes, they're still in business. It's quite a great story....

Q: What would you advise someone who had an idea of getting into a media venture in Russia?

Well, I think it's still the most exciting market in the world. The Russians are really in the midst of a contemporary revolution, similar to the French Revolution. The very basis of the whole society is changing, and it's the most thrilling, dynamic, exciting place in the world as far as I'm concerned. But there is an unfortunate kind of mix of the old style of doing business from the Communist days as well as wonderful elements of real democracy and entrepreneurship.

Finding the right balance, achieving a marriage that makes sense is a big challenge, because the most important element is trust and confidence. That was something we built up at We/Mbl over the two years we were in operation, in terms of the way we got along with our fellow Russian reporters and editors. But on the business level it was really missing.

Another example from We/Mbl: The Russians never had a budget for the staff, they would just pay them from the weekly receipts of the paper. In other words, if they got X amount of rubles they would divide it up among the people who were working there. But the staff never knew from one week or one month to the next whether they were going to be paid. You can't run a business that way.

So, the plus side is, if you're a young person just out of college, you have opportunities to do things in Russia that you wouldn't have anywhere else in the world. You can go into business for yourself with a small amount of capital, you can find Russian partners, you can have opportunities that you simply couldn't have for decades in the United States ... to run your own business, to run your own paper....

But there are major hazards, and you have to know what they are before you get into it. And make sure that you don't select your business partner just on the basis of a sort of infatuation. A lot of Americans go over there, and they get wined and dined by the Russians ... and suddenly they think that anything is possible, that this is nirvana. They feel terribly important because they've been wined and dined. Then they find out a few months later that they really don't like their partner or he's been cheating them....

So it's important to have the right dynamics and the people.

Q: It's almost the case where someone might want go over and work for a Russian organization.

Absolutely. That's the best thing you could do.

Q: It sounds as if the era of citizen exchange is passing into a new era.

I think the technical side is far more important. The citizens exchange days are ... I think we've outlived the need for that. What you need now is a kind of executive training corps ... like the Peace Corps. The president of the United States should go on television and say to every major American corporation, "The Russian and American governments have agreed to pay for the air fare and living expenses of some of your senior management in every field, in steel and automobile manufacturing and the media industry.... And I want you, the CEO, to select three or four or five people you can spare and send them to Russia and similarly bring Russian executives here."

The technical side is the most important of the citizen exchange programs that ought to happen in the future. What is so important is that the Russians understand there is an American commitment to care about them as people, and care about what happens to them.

All we're doing is throwing money at the issue, and money is not the answer. Expertise is. That's what's going to ultimately make the difference in terms of whether they remain our allies or not...

We're beyond the days where you just had 300 or 400 Americans go over there in a program like Chautauqua. You don't need Chautauqua anymore. You needed it at the height of the Cold War, when I started it. You needed the public to put pressure on the government to stop this nonsense about "the evil empire," to stop the process of dehumanization.

What you need now is technical expertise ... management skill.

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The emphasis isn't so much in the area of teaching police reporters how to write better stories. Rather, it's in the field of media management: how to market information, how to make all the facets of publishing and broadcasting fit together to meet the bottom line as well as the ethical and creative standards that make journalism more than just another business.

The U.S. government is playing a growing role in media development -- not so much through running programs directly, but through funding programs managed by nongovernmental organizations.

Last year we focused on media training programs funded through the U.S. Information Agency. Among the organizations supported by the agency have been the Institute for International Education (212-883-8200), Internews (707-826-2030), the National Forum Foundation (202-543-3515) and the University of Alaska in Fairbanks (907-474-6249).

Each year the agency sends out a call for proposals from nonprofit organizations, with grants awarded on a competitive basis. Such organizations may request information on the grant competition for NIS training programs from the U.S. Information Agency, Room 216, 301 Fourth St., S.W., Washington, D.C. 20547.

In the past year, the Eurasia Foundation was established with financing from the U.S. Agency for International Development to support media and communications development in the former Soviet Union (as well as economic reform, governmental reform and the development of nonprofit organizations there).

Here's a sampling of this spring's media development grants from the Eurasia Foundation:

-- Moscow Center for Prison Reform: To support the radio broadcast "Oblako" ("Cloud"), which reaches prisoner throughout Russia and deals with issues of prison reform; and the development of a database for archiving letters reporting on prison conditions in Russia.

-- Sabre Foundation: To support electronic publishing and on-line services in support of the international technical assistance community, and to send books to Kazakhstan, Kyrgyzstan and Uzbekistan.

-- Harvard University / Ukrainian Research Institute: To enhance e-mail access in Ukraine.

-- Mitacom Inc.: To support reporting on business, economics and political reform on the Ostankino program "America with Mikhail Taratuta."

-- Globe Independent Press Syndicate: To support the Freedom Link Computer Network, providing international sources of information to regional newspapers in Russia via e-mail.

-- Nova Mova: To support a training program in Eastern Europe for Ukrainian journalists, focusing on economic reform in the old East Bloc.

-- Yeshiva University: To support the Cardozo School of Law's Moscow Summer Institute on Broadcasting and Press Law.

The Eurasia Foundation is at 1527 New Hampshire Ave., N.W., Washington, D.C. 20036.

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Odds and ends for East-West communicators

What's new on the Net

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In the past few months, the links between Moscow-based networks and the global Internet have grown by leaps and bounds. There has also been an explosion in East-West resources available via the Internet.

The largest network in the former Soviet Union is Relcom, which serves 200,000 customers. Relcom has always been the major thoroughfare for Russia's information highway, and now that the network has high-speed, real-time links to the rest of the Net, it's beginning to make its presence known around the world.

For years Relcom (whose name is a contraction of "Reliable Communications") has maintained a large hierarchy of newsgroups, some freely accessible and others more commercial in nature. There are also anonymous FTP sites such as ftp.kiae.su. And now there's the Window-to-Russia project, a World Wide Web site that provides access to on-line art, archives and everything else Relcom has to offer. Point your Web server toward http://www.kiae.su/www/wtr. For more information, send mail to wwweditor@kiae.su.

Other Net resources worthy of note:

-- The Regents' Global Center of the University System of Georgia has made resources related to the Newly Independent States and Eastern Europe available via gopher. To connect: gopher.peachnet.edu or telnet info.peachnet.edu (logon and password are "info"). From the initial menu, choose "University System Information," then "Regents' Global Center." Check out "Current News From Around the Globe."

-- The Scientific Library of the Moscow Lomonosov State University and the Library Computer Network Co. offer reference services by e-mail, including assistance in finding addresses and phone numbers for officials, political figures and scientists. But it comes at a price, $25 or more per inquiry. For information, send mail to inf@lib.msu.su.

-- IREX, the International Research and Exchanges Board, has established public access e-mail sites at universities in Kazan, Novosibirsk and Vladivostok. If you want to reach an associate in those cities, you can send mail to the sites, and IREX will notify your contact in those cities and encourage them to send a reply via e-mail. The service is offered to scholars and representatives of nongovernmental, noncommercial organizations. Messages should provide as much information about your intended contact as possible, particularly a phone number. The Kazan site is root@univex.kazan.su; in Novosibirsk, it's nskpub@locutus.nsu.nsk.su; and in Vladivostok, contact garth@pub.marine.su. Also, you can contact academicians in Moscow via comm-pub@comlab.vega.msk.su. For more information, contact IREX in Washington (tonyb@igc.apc.org) or Moscow (irexog@glas.apc.org or fick@glas.apc.org).

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Just the fax (and the mail)

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Unigate is a commercial service that facilitates fax transmissions to and from Russia and other former Soviet republics, as well as regular postal services involving the region.

Rates For Fax Service:

-- U.S.-Russia: $1.59 per page.

-- Canada-Russia: $1.79 per page.

-- Europe-Russia: $2.59 per page.

Rates For Postal Service:

-- U.S.-Russia: $1 per page.

-- Canada-Russia: $1.50 per page.

-- Europe-Russia: $1.79 per page.

Unigate's U.S. portal is in Seattle. For more information send mail to Yuri Yulaev at yuri@atmos.washington.edu.

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Changes for the better

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-- Seattle's KING-TV has provided Moscow's NTV (Nezavisimoe Televidenie, or Independent Television) with public service announcements on various topics, to be adapted for Russian broadcasts.

-- The Union of Russian Journalists has been working on an ethics code for journalists that would discourage reporters from accepting bribes for writing stories favorable to politicians or companies -- an all-too-common practice in the past. The new code also stresses the need to distinguish facts from opinion, and proposes that the press withhold the names of crime victims and witnesses.

-- The Open Media Research Institute has been incorporated in Washington, D.C., as the successor to the Radio Free Europe/Radio Liberty Institute. According to the incorporation papers, the institute will conduct "research and analyses for, and make available information to, Radio Free Europe/Radio Liberty and to other tax-exempt organizations, scholars, journalists, students, and others in Eastern Europe and the former Soviet Union and elsewhere in the world." It also intends to "establish educational programs principally for analysts, archivists and journalists" in Eastern Europe and the former Soviet Union.

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"Short Takes" is gleaned from a variety of on-line and on-paper sources.

Conference exploring on-line media is on track

The event will bring together journalists, networkers and other communications professionals from East and West to discuss the development of international on-line media, opportunities for commercial applications and the implications for Eastern and Western societies.

Among the participants are Esther Dyson and Deborah Kaplan, members of the Clinton administration's National Information Infrastructure Advisory Council; Anatoly Voronov, director of GlasNet; representatives of Relcom and Sovam Teleport; John Dancy, Moscow bureau chief for NBC News; Vladimir Orlov of Moscow News; and Roger Fidler, director of new media for Knight-Ridder newspapers.

Major funders of the conference are the U.S. Agency for International Development, providing support through The Eurasia Foundation; and U S West International.

Other contributors include the Aldus Corp., Andrew Corp. and Macomnet, GlasNet, New Media Ventures, Relcom and Sovam Teleport.

GlasNews subscribers will receive daily updates from the conference as part of the Summer 1994 issue. For more information, contact the CEP at 111 W. Harrison St., Seattle, Wash. 98119 USA. Phone: 206-285-7070. Fax: 206-281-8985. E-mail: glasnews@eskimo.com or 71232.344@compuserve.com. Information is available via FTP (ftp://ftp.eskimo.com/u/g/GlasNews/nm.nw) and the World Wide Web (http://solar.rtd.utk.edu/~aboyle/new.world.html).

Conference chairmen are David Endicott, chairman of the CEP; and Boris Nepomnishiy, general director of ITA Ostankino. Co-chairmen are Alan Boyle, Victor Kuznetsov, Marina Orlova and Gregory Ratner.

The CEP is a nonprofit, volunteer organization aimed at promoting contacts among communications professionals in the United States and the former Soviet Union. ITA Ostankino is the television news service for the Russian state broadcasting network, seen throughout the former Soviet Union.

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