Coronavirus Worklife: Russian Publisher Cites Up to 75-Percent Profit Loss

In News by Eugene Gerden

The Russian market’s book publishing sector has been designated by the state as eligible for special financial support during the pandemic.

Masks and umbrellas: A June 5 shot of consumers in Moscow’s city center. Image – iStockphoto: Yury Karamanenko

Editor’s note: Today (June 11), Georgi Kantchev and Drew Hinshaw are writing at the Wall Street Journal that Vladimir Putin’s challenge to create a COVID-19 vaccine by the autumn is being met in “state-run Siberian labs’ and “military garrisons where servicemen are isolating ahead of participation in a clinical trial.” The 6:33 a.m. ET update (1033 GMT) puts Russia third in the world for its soaring caseload of 501,800 infections. Critics say the country’s 6,522 deaths is an understatement of figures. It was announced Monday (June 8) that restrictions were being eased. —Porter Anderson

By Eugene Gerden

‘The Epidemiological Situation’
In the assessment of Oleg Novikov, general director of Russia’s Eksmo-AST publishing group, the domestic book business may have lost 75 percent of its projected revenue during the months of the coronavirus COVID-19 pandemic so far.

Novikov points to the recent addition of publishing to a federal listing of industries hardest hit and eligible to apply for state relief funds.

According to Novikov, the current seriousness of the problem is confirmed by a recent decision of the central government to include the domestic book trade in a list of sectors of the Russian economy that are being most heavily affected by the pandemic—those likely to be most vulnerable to the economic fallout.

What he’s referring to is a resolution signed into law on May 29 by the prime minister, Mikhail Mishustin, and put forward by the ministry of economic development. This resolution—as reported by Rospechat, the federal agency on press and mass communications—placed book publishers under an umbrella of “affected industries,” a group that also now includes publishers of newspapers, magazines and other periodicals, as well as television companies, radio stations, digital media outlets, and news agencies.

“The role of the media is particularly important now,” Mishustin said at the signing of the resolution. “Citizens must get timely and true information on developments,” Mikhail Mishustin stressed.

In fact, the state position, as described by Ropeschat, includes a clear understanding of how these media are being impacted. The agency’s staffers write, “The media industry faces a complicated situation. Revenues from selling books, printed media, and from subscriptions are shrinking; advertising incomes are tanking. Small companies and organizations in the regions are particularly affected.

“The government has received numerous messages from citizens, associations and state bodies with requests to render additional assistance to the industry.”

Among the support measures Russian media outlets are entitled to request is a six-month tax deferral—except for VAT—as well as deferrals on rent payments for premises owned by the government, municipalities, or private individuals. Beneficiaries are also eligible for interest-free loans for urgent needs and wages, 2-percent “soft loans” for any purpose, and a moratorium on bankruptcy and scheduled and surprise inspections.

Traditional Bookstores Account for 60+ Percent

In Moscow, May 2. Image – iStockphoto: Yury Karamanenko

“The epidemiological situation,” Novikov tells Publishing Perspectives, “clearly shows us how much the book market in Russia depends on traditional stores.

Oleg Novikov

“Currently the share of traditional retail and federal book chains in the structure of our domestic book sales exceeds 60 percent. The remaining sales channels are online stores, FMCG networks, budget purchases, and unstructured sales.

“And the closure of traditional bookstores since the beginning of the pandemic has led to the loss of up to 75 percent of profits for Russian book publishers.”

Novikov says that while—at least until first liftings of restrictions announced this week—the majority of traditional bookstores have been shuttered. But as in so many other world markets, online commercial channels have continued to operate and in many cases grown, serving traffic newly diverted from brick-and-mortar shops.

“We had seen growth of up to 40 percent for digital sales in some areas on a year-over-year basis,” he says. And he’s also seeing a steadily rising consumer response to various subscription services, he says, which also can cordon off a group of consumers that may be less amenable to standard bookselling appeals.

In his comments, Novikov returns to another longtime challenge in the market, a high rate of book piracy. Since the start of the pandemic, he says, piracy has grown, the outbreak providing a new impetus for those who collect content they don’t pay for.

Novikov says many popular social services and networks have become smokescreens for piracy, considered by many in publishing to be acting as sources of traffic for pirates.

“Unfortunately,” he says, “the proposals from our Internet Copyright Association on introducing digital fingerprints for the automatic verification of illegal content online haven’t found support by the Internet service providers.

“Yandex, which currently is our largest and most popular Web search and Internet company, has all the needed  technical tools to deal with the distribution of pirated book content. But it’s hard to attract the company to the importance of this problem. We don’t see any willingness on the part of these services to cooperate with book publishers.

“Because of this, Eksmo-AST and other leading Russian book publishers are looking for ways to create a more active dialogue with the state and the raise of the image of book publishing in Russian society and culture.”

‘More Attention to Reader Interests and Preferences’

Food delivery in Moscow, April 14. Image – iStockphoto: Yury Karamanenko

If he sees a bright lining here, Novikov says it’s in his belief in the ability of major industry players to quickly implement various innovative formats and  solutions, which have appeared in the market in recent years, that will provide them an opportunity to stay afloat amid the global economic uncertainty.

However, he says the industry needs to work harder to develop its formats so that it’s less vulnerable to the distractions consumers are getting from other media.

Ropeschat, on May 10, included Eksmo-Ast in a list of 1,151 companies in Russia designated as “backbone” corporations that have taken the heaviest damage from the effects of the pandemic and are in line for deeper supportive backing from the state. To Novikov, this translates into what he describes as better support by the company of its 5,000 or more authors—and to do a more detailed evaluation of what the outbreak and its fast expansion of cases in Russia is doing to the book business.

Once a recovery is underway, book retail in the smaller cities of Russia, settings of 40,000 or less, need special attention so that book services are available. He also says he wants to see access to digital reading related services—ebooks and audiobooks in particular—made more readily available for everyone.

And lastly, Oleg Novikov says, “There’s a need for all of us here to pay more attention to the interests and preferences of readers.”

More from Publishing Perspectives on the Russian market is here, and more from us on the coronavirus COVID-19 pandemic and its impact on international book publishing is here and at the CORONAVIRUS tab at the top of each page of our site.

About the Author

Eugene Gerden

Eugene Gerden is an international freelance writer who specializes in covering global book publishing and bookselling industry.