WEEKLY THE RUSSIA JOURNAL Published in Moscow & Washington, D.C. August 16 - 22, 2002 Since 1998. Vol. 5, No. 127

AVIATION THE FIFTH DREAMING COMPLICATION ELEMENT OF BIG BEN Recent crashes lead to The city plans to replace A new travel agency hopes insurance premium hikes. five-story Khrushchevkas. to cash in on U.K. travel.

Page 3 Page 4 Page 5 DivineDivine interventionintervention

Russia’s church- restoration firms cry corruption

Pages 6-7 ITAR-TASS

WHO OWNS LUKASHENKO RUSSIA AND INFLATION An inside look into the A roundup of the week’s country’s show-business business news in Russia industry and its leaders. and the C.I.S.

PAGES 14−16 PAGES 17−20 ITAR-TASS ITAR-TASS

www.Loot.ru The best connection you will ever make Bilingual clas- sifieds portal Apartments and offices for rent • Build a workforce • Get career advice • Expand for Russia and FURNISHED APARTMENTS AVAILABLE your opportunities Eurasia Management and Leasing: Advertisement enquiries theLEADER Hines at (095) 937-6688 ONWARD, UPWARD tel: 956−5050 • fax: 956−5920 • www.mbtg.ru/ppm or e-mail:[email protected] www.theLeader.ru 14 > August 16 − 22, 2002 ИД "Коммерсантъ" Who owns Russia The Russia Journal presents the next installment in a Kommersant-Vlast and NTV report that unmasks the people behind Russian industry. Welcome to the music industry Kommersant

prizes were awarded in exchange for bribes. In 2001, Sirotyuk announced that, History of the sector from then on, he would take money for ▼ 1995❙ giving an award officially. In May, Radio Maximum gave its backing to the first Maxidrome rock festival in ▼ 1993❙ Moscow. The festival was organized by 1991-2000 Maximum’s program director, Mikhail Russian recording company SBA/Gala Kozyrev, producer Dmitry Groisman and By YURY YAROTSKY was founded by weekly paper Records signed an agreement with EMI, heads of Rise Music Vladimir Meskhi and Moskovskiye Novosti and U.S. companies whose catalogue included the Beatles Leonid Landa. Groups taking part in the festi- y 1991, the Russian music business Westwood One Inc., Story First albums, David Bowie and many other pop- val included Agatha Christy, Va-Bank, industry had already all but shed Communication and Harris Corporation. ular artists. This was the first Western Bravo, Nogu Svelo!, Nyeprikasayemiye and B its Soviet heritage. Melodiya, the Alexander Kasparov, Radio Maximum’s major to enter the Russian market. others. The experience was a success and gave state recording company, had lost its influ- first program director, is now regional The Russian Supreme Soviet passed a Russia its first major annual rock festival. ence on the market and official concert director for EMI in Eastern Europe. law on copyright and related rights. A year BMG, the third major to come to Russia, organizers were losing ground to private later, the International Federation of opened a representative office. organizers. The sector’s subsequent histo- Phonogram Producers opened a represen- From May to June, a string of interna- ry is one of putting into place more civi- ▼ 1992❙ tative office in Russia. For the first time, tional stars — Roxette, Joe Cocker, Elton lized market laws and a general increase in the country had a legal basis to protect John, Diana Ross and Julio Iglesias — activity that was dealt a sharp blow by the An audio and video market opened in copyrights and fight audio piracy. played in Moscow. Most of these concerts 1998 financial crisis. the Gorbunov House of Culture in the west were organized by SAV Entertainment. of Moscow. This market went on to become In October, a presentation was held in the famous Gorbushka, the biggest pirated ▼ 1994❙ Moscow for the magazine O!, the first ▼ 1991❙ audio and video market in the world. Russian publication devoted to pop music The Ovatsiya national music prize was Polygram, the second major company to and designed along the lines of similar In September, a concert called the awarded for the first time in the Rossiya enter the Russian market, opened an office publications in the West. The magazine Monsters of Rock at Tushino took place at state concert hall. The awards were orga- not far from the Gorbushka market. Boris was published by Seva Novgorodtsev, the the Tushino airfield in Moscow. On stage nized by obscure businessmen Grigory Zosimov became Polygram’s first director BBC Russian service’s legendary music were Metallica, AC/DC and the Black Kuznetsov and Anatoly Sirotyuk. in Russia. Zosimov was also the first to program host. But there was only enough Crowes. Fans and police clashed on the air- Prizewinners that year included Na-Na, begin marketing recordings of Russian money to put out three issues. The niche field. The concert was organized by Boris Oleg Gazmanov, Tanya Bulanova, poet artists under the Polygram label. These for a quality pop-music magazine in Russia Zosimov, then a little-known entrepreneur. and songwriter Alexander Shaganov and included Philip Kirkorov, the remained empty until 2001, when the first In December, Russia’s first FM radio sta- Radio Evropa Plus. Right from the start, Obermaneken group and Zosimov’s issue of the Russian version of British tion, Radio Maximum, hit the airwaves. It there were accusations that the Ovatsiya daughter, Lena Zosimova. weekly New Musical Express appeared. August 16 − 22, 2002 > 15

Ioseph Kobson Alsou Sergei Arkhipov

The Aprelevsky recording factory was wards in an effort to prevent a crush from privatized. Around half the shares taking place. It took people several hours remained in state hands. The company to make their way home after the concert. soon found itself on the brink of bankrupt- The sector today cy and was saved only by renting out fac- tory space. Now part of the factory is used ▼ 1998❙ ven back in Soviet times, there Imperial, one of the first glossy maga- to produce noodles. were business-minded impresarios zines in Russia). In October, the Stantsiya radio station, Russian recording company Soyuz, one E who knew how to organize tours so Before MTV Russia began, Zosimov and created by Rise Music, began broadcasting. of the country’s largest, signed an agree- that artists would get a handsome fee — Viacom company had a long history of It focused on trendy dance music. ment with Warner. This marked the of which they would get a good cut. With relations. arrival of the fourth major on the Russian the arrival of capitalism, these people Thanks to Zosimov’s efforts, clips with market. Warner worked with Soyuz until had the opportunity to give their entre- the MTV logo appeared at various times ▼ 1996❙ 2000 and then decided not to renew the preneurial talents full rein. But not all on the 2x2, Ostankino and TV6 TV chan- contract and began working instead with were successful, and many key positions nels. Zosimov later organized broadcasting Then-President Boris Yeltsin’s presi- young Russian recording company WWW in show business have been snatched up under his own trademark, BIZ-TV. dential election campaign managers came Records. Warner did not divulge its rea- by people previously not connected to the This was what became MTV Russia in up with the “Vote or Lose” slogan and got sons for not continuing work with Soyuz. sector. September 1998, at the height of the almost all of Russia’s rock and pop stars to In April, Boris Zosimov announced an financial crisis. In September 1999, give concerts supporting him. This reached agreement between BIZ Enterprises and ARS Zosimov said in an interview with a high point in June, when Yeltsin danced MTV Networks on launching MTV Russia. ARS is run by composer and business- Kommersant that he had sold part of his on stage during a concert by Yevgeny Osin The TV channel began broadcasting in man Igor Krutoi. The company is involved shares to Viacom, though he did not name in Rostov. A few days later, Sergei September that same year. The first clip it in practically every area of show business, the number of shares or the size of his Lisovsky, one of the organizers of the Vote showed was Mumiy Troll’s “Vladivostok — from managing artists to organizing con- remaining stake. or Lose campaign, was arrested while try- 2000.” certs and broadcasting. The list of artists Having a clip played on MTV has ing to take a box with $500,000 out of a In August, just a few days before the working with ARS includes Valery become virtually a requirement for any government building. financial crisis, the Rolling Stones gave a Leontiev, Alexander Serov, Boris artist to be successful. Not all fit the chan- General Records, a company set up by concert at Moscow’s Luzhniki sports stadi- Moiseyev, Laima Vaikule, Irina Allegrova, nel’s format, but they can always try to SAV Entertainment and music critic um. The group’s fee was a $1.4 million — an Diskoteka Avaria and Prime Minister. get played on Hit-FM, which has a more Artemy Troitsky, put the collected works unprecedented sum for Russia. Rumor had it ARS has its own radio station — Love liberal music policy. of Alla Pugacheva on the market. The col- that Silence Pro, the company that organized Radio. In 2000, ARS almost got the right to Getting played on TV and on the radio is lection contained 13 CDs with 211 songs the concert, suffered heavy losses as a result nighttime airtime on RTR, which had had good publicity and makes it possible to and sold for $150. Rumor had it that of not being able to collect ticket sales earn- plans to launch an alternative to MTV rake in more money from concerts and Pugacheva was the first Russian show- ings from distributors and has been involved from 1 a.m. to 6 a.m.. But Krutoi was not up audio sales. business star to be paid royalties of more in less-high-profile projects since then. to that project, and his television presence MTV doesn’t take money directly from than $100,000. The financial crisis caused the bottom to is limited to the programs “Dobroye utro, artists, but uses a more cunning scheme In September, Kirill Zelenov, the co- fall out of the Russian audio market. Of 220 strana!” and “Pesnya goda.” for making money out of them. owner and director of ZeKo Records, was recording companies, only 70 were still It either proposes that they appear killed. At that time, ZeKo Records was operating by the end of the year. The dis- LogoVAZ-News Corp. without a fee in regional promotion one of the largest recording companies in tributors felt the blow the hardest — they The company managing the media events, or requires that clips be filmed by Russia and its catalogue included Alla had signed contracts in rubles and lost a assets of former Duma Deputy Boris MTV employees so they’ll be considered Pugacheva, Mikhail Shufutinsky, Irina great deal of money as a result. But almost Berezovsky was set up by him and up to the channel’s standards — for a fee, Allegrova, Igor Nikolayev, Natasha all the major companies survived the crisis. Australian media magnate Rupert of course. Koroleva and Alexander Malinin; groups In December, Nashe Radio, a project Murdoch. It includes two entertainment MTV’s only rival in Russia is the Muz- such as Tekhnologiya, Dyuna, Primus, between Boris Berezovsky’s LogoVAZ and radio stations — Nashe Radio and Radio TV channel, which belongs to Alfa Group. Lesopoval and ChaiF, and dozens of other Rupert Murdoch’s News Corporation, Ultra. Nashe Radio began broadcasting in Muz-TV’s ratings are slightly lower than artists. The investigation revealed that began broadcasting. Mikhail Kozyrev, who December 1998, and Ultra began in MTV’s, but its regional broadcasting net- the murder was arranged by Vladimir was unexpectedly fired from Radio November 2000. work is more developed. Kozlov, the other co-owner of ZeKo Maximum five months earlier, became From a commercial point of view, the Muz-TV’s general director is Ruben Records (the company’s name comes from director of Nashe Radio. formulas chosen for these two stations are Oganezov, who used to run the large pro- the first letters of its co-owners’ last not the best — Nashe Radio plays Russian duction company Mediastar, which, until names). Zelenov had accused Kozlov of rock and Ultra plays alternative music. summer last year, managed Russia’s most embezzlement and tried to have him ▼ 1999❙ Both stations are run by Mikhail Kozyrev, successful rap stars, led by Detsl. removed from among the firm’s founders. who was program director at Radio Now it manages and puts out albums for In 2001, Kozlov was sentenced to 11 years The singer Alsou signed a contract to put Maximum until 1998. the singer Nikita, the group Dinamit and in prison. an album with Universal Music. In Russia, The two station’s programs are pro- other new popular artists. Alsou’s affairs were managed by Universal duced by Ultra Production, a company Russia, which had changed its name from that is also part of LogoVAZ-News Russkaya Mediagruppa ▼ 1997❙ Polygram after being bought by the Corporation. Kozyrev is one of the few sta- This company is managed by three co- Seagram company. tion directors who regularly appear on the owners — General Director Vladimir In September, singer Iosif Kobzon gave a In August, MTV Russia organized a con- airwaves. He hosts the Nashe Radio hit Bogdanov, President Sergei Arkhipov and farewell concert in the Rossiya state concert cert that included U.S. group the Red Hot parade. Chairman of the Board Sergei hall. Kobzon had said that this would mark Chili Peppers on Vasilievsky Spusk, just LogoVAZ-News Corporation also Kozhevnikov. The company’s best-known the end of his performing career. Almost behind Red Square. A year later, the includes the Real Records record compa- project is Russkoye Radio, the country’s the entire political and business elite of the Moscow mayor’s office banned such large- ny. Real Records took over the market most popular radio station. country attended the concert, which went scale concerts close to the Kremlin. Rumor held by ORT Records, the TV channel As well as Russkoye Radio, Russkaya on until six in the morning. Kobzon kept his had it that Patriarch Alexii II had asked ORT subsidiary that closed down. Real Mediagruppa also owns Radio Monte promise only in part. He hasn’t performed for the ban after being outraged by the Records now works with Alsou (for her Carlo, Dinamit-FM, Radio Tango and any solo concerts since that date, but he Red Hot Chili Peppers concert. Russian-language work), Zemfira and Russkoye Radio-2, which replaced the regularly takes part in concerts with other ChaiF. Stantsiya dance music station bought by stars, giving his preference to birthday per- MTV Russkaya Mediagruppa. formances at the Rossiya and State Kremlin ▼ 2000❙ The company also owns the Palace concert halls. MTV Russia and the Hit-FM radio sta- Gramophone Records record company In September, French musician Jean- Sony music entered the Russian market, tion are now controlled by Boris Zosimov. and companies organizing concerts by Michel Jarre gave a concert on the completing the list of major recording Over his career, Zosimov has worked in Russian artists at home and abroad. Vorobyeviye Hills in Moscow as part of the companies present in Russia. one capacity or another in almost every Every year, Russkoye Radio organizes city’s 850th anniversary celebrations. In August, the Nashestviye rock festival area of show business. He has organized the Zolotoi Gramofon awards held in the More than 2 million Muscovites went to was held in Ramenskoye near Moscow. concerts (he was one of the people behind Kremlin with almost all Russian show the concert. The police tried desperately to This was Russia’s first two-day open air the concert with Metallica, AC/DC and business stars taking part. limit the flow of people coming to the rock festival. There were worries about the Black Crowes at Tushino in 1991), It’s possible to listen to Russkoye show, but people even used rafts to cross keeping order, but the crowd of more than worked in the recording business (he was Radio almost anywhere in the whole the Moscow River in an attempt to get to 100,000 people didn’t cause any problems. head of the Russian section of Polygram, country, and having control of so much the square in front of the Moscow The film “Brat-2” was played on giant now Universal Russia, and still holds a of the airwaves makes Russkaya University building on the hills. All the screens at night and the concert ended 49-percent stake in the company) and has Mediagruppa very influential in the nearby metro stations were closed after- with a performance by Zemfira. also worked in publishing (he published entertainment world. 16 > August 16 − 22, 2002

Mikhail Kozyrev Boris Zosimov Troitskiy

hardly any Western artists came to ed cassettes were sold for around $250 times a day — something unthinkable SAV Entertainment Russia, and recording companies either million. The number of pirated CDs only a year ago. SAV Entertainment was founded by went bankrupt or reduced their activities increased, as the Russian factories pro- Concerts by foreign stars have also Alla Pugacheva’s ex-husband, Yevgeny to a minimum. Now recovery is underway, ducing them increased their capacity, and increased, with several major concerts a Boldin, and her former interpreter, but there are still some problems. the ineffective system for enforcing month. Concerts planned for this year Nadezhda Soloveva. In recent years, this As sales have increased, so has piracy. stamps on legal CDs couldn’t cope. include Bob Dylan, Whitney Houston, company has become the number one The International Phonogram Producers But the number of pirated cassettes Aerosmith, Toni Braxton and Radiohead. organizer of concerts in Russia by Western Association estimated that pirated record- decreased, and experts say that is because The only stars that Russian promoters artists. SAV has helped bring to Russia ings accounted for 64 percent of the legal producers are now practicing a more cannot yet attract are the real superstars, Diana Ross, Elton John, Sting, Brian Russian audio market in 2001 (an increase reasonable repertoire and price policy. like Madonna and Paul McCartney — Ferry, Depeche Mode, Offspring, Eric of around 2 percent compared to 2000). The five major Western recording com- even with help from sponsors, it’s not pos- Clapton, the Scorpions, Mel C, Yes, Brian The losses to copyright-holders are esti- panies — EMI, Warner, BMG, Sony and sible to cover the expense. Adams, Prodigy (who gave an unprece- mated at up to $550 million. Last year, 42 Universal — are becoming more active on Few changes are in store for media out- dented free concert on Manezh Square) million pirated CDs and 154 million pirat- the Russian audio market. BMG has lets closely linked to the show-business and many others. signed a contract with singer Linda. Sony world. Strong players have already edged With this kind of experience, the com- works with the group B2 and Universal out the weaker players. pany has no trouble reaching agree- promotes Alsou and Tatu. Unprofitable radio stations such as ments with the agents of well-known Experts also note that regional record- Radio Rox, Radio Nadezhda, Radio NSN Western stars. ing companies are becoming more active. and Stantsiya were all closed down. Sponsorship support from Alfa Bank for One of the most notable is Russky Zvuk, The large holdings that have taken their particularly expensive projects, such as which includes companies from place are interested, above all, in generat- Elton John’s concert at Tsarskoye Selo, Pereyaslavl-Zalessky, Kazan, St. ing advertising revenue, rather than in gives SAV a big advantage over competi- Petersburg, Mineralniye Vody, Rostov- cultivating the musical taste of their lis- tors, because unlike in the West, it’s virtu- on-Don and Novosibirsk. Lyube, one of teners. The only changes will be in the vol- ally impossible in Russia to recoup expens- Russia’s most successful groups, has ume of the advertising market, and thus in es through ticket sales for concerts by already announced that it will work with the profits radio stations make. The same Western stars. Russky Zvuk. goes for entertainment TV. But SAV actually does have several ...The number of pirated More orderly sales of legal CDs and cas- In general, the Russian show business competitors that are doing perfectly well. settes in the regions should increase the industry is on the way up, by all measures The Russian Academy of Entertain- cassettes decreased, and share of legal production. except one. The West is interested in ment, for example, (the former Andrei This is more important because the Russia only as an importer of music and Agapov Agency) has organized the experts say that is number of CDs released is still limited. It’s artists from abroad. Russian concerts of Enrique Iglesias, Eros because legal producers still rare for more than 100,000 copies of Numerous attempts to get Western lis- Ramazotti, Marilyn Manson and others an album to sell – a figure considered low teners interested in Russian music and and also organized the bullfight that was are now practicing a even in European countries with a much artists have ended in failure. The only to be held in Moscow last year before it smaller population than Russia. breakthrough so far came when Rostov- was banned. more reasonable reper- The tour business is also developing. based techno group PPK took third place Promoter Vladimir Kiselyov, who used toire and price policy. Major Russian stars have several concerts on the British charts, but this is more like- to organize the White Nights festivals in a week in Moscow, sometimes several ly to prove the exception, not the rule. St. Petersburg and concerts under the aegis of Moskovit, a company controlled by Iosif Kobzon, now runs the state Kreml company, which many consider to be under the patronage of Vladimir Kozhin, the presidential household affairs depart- ment manager. Kiselyov prefers to bring rock stars with some history to Russia, such as Status Quo, Mango Jerry, Rick Wakeman and others. Kiselyov also organized last year’s concert by Jose Carreras on Red Square. The TCI company specializes in “heavy” music. Its greatest success was the Rammstein concert at Luzhniki last year (this year’s concert was cancelled), for which tough security measures were taken to guard against public distur- bances. TCI was the first company to risk taking Western stars beyond Moscow and St. Petersburg and organized concerts by Nazareth, Deep Purple and singer Sam Brown in several Russian cities. The JSA company has been increasing- ly active over the last two years, branch- ing out from doing the technical organiza- tion for concerts to taking care of overall organization. JSA has organized Russian concerts for Roxette, Alice Cooper, Guano Apes, Muse and others. Prospects for the sector Russian show business is developing in strict accordance with the laws of the market economy. Small companies either disappear from the scene or are swallowed by larger companies. Large companies, meanwhile, are grabbing more and more market niches and leaving no room for newcomers. Like any other business, show business works for a specific consumer and depends on purchasing power in the coun- try more than anything else. This was par- ticularly clear after the default, when Kommersant