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News

"Hasty replacing of press kiosks with the French model threatens the press distributors and publishers", - Dmitry Martynov, president of PDA

PlanetaSMI.RU talked with the president of the Association of Press Distributors Dmitry Martynov on the topical theme for the press sales market - the modernization of the retail distribution of newspapers and magazines in Moscow.

 - Dmitry Vladimirovich, yesterday our portal has published an interview with the deputy head of the Moscow Department of Media and Advertising  Julia Kazakova, dedicated to the program to streamline the system of retail press sales, deployed in Moscow. Julia Georgievna presented the position of the city government in this regard, much detailed during the conversation. How do you evaluate the said?

- Our public institution with great comprehension refers to the concern expressed by Julia Georgievna about the market distribution of printed media for the replacement of the stalls on new and active engagement in the implementation of the "road map" of the project. With the understanding, because, really, most of the players in the market has not changed, and what is worse than that - can not change, at least in the necessary time, the existing kiosks to new objects.

- Why? Too expensive?

- The reasons for this are different. I have no right to disclose the commercial life of the different companies on the market. I can only say that some can not change, due to the lack of sufficient funds to replace the entire network, while others do not change and are not going to do that, so they do not see any possibility to recoup the investment in the new stalls. Especially when it comes to the new French-style booths. The cost of production is about 700-800 thousand rubles, which is two times higher than the cost of facilities approved by Moscomarchitecture, and because of the low profitability of a distribution business, return on investment for the allowed length of time for kiosk rental today in three to five years is simply impossible. Moreover, despite all the assurances of the city authorities, any changes to existing documents governing the metropolitan press distributors, has not yet been made, so even if you install a new expensive kiosk, you risk the very next year to get with him for the competition and  even at an auction! Hence, many players in the market develops a relation, like: "put up for auction - and burn it all with a blue flame , with such a margin!" ....

I can say that some Moscow networks still had a modernization program, conducted a systematic replacement of kiosks. For example, such program existed at "Vechernaja Moskva" concern. The development and installation of new facilities were done by already-mentioned company "Kardos" and "Centropechat" network. When it was announced the impending replacement of all the stalls of the press in Moscow on the new model, the companies, operating the modernization curtailed. It makes no sense to put new stalls, when the city still wants to change them. That's why it turns out that over the past six months, on the part of market operators the city does nothing in this direction.

- When you first hear about the upcoming program - you supported it?

- The proposal of the Department of Media and Advertising made this August and sounded like: "Advertising agencies - the right to advertise for ten years; distributors - new stalls for free for the same ten years, the city - just 2.5 thousand beautiful city-formats on the streets and at no cost from the budget",- we supported with enthusiasm mixed with doubt.

- Why were doubts?

- Because "the devil is in the details". Will it be possible to implement the project? As the age-old Russian wisdom says - free cheese is only in a mousetrap, and even then only for a second mouse. However, all the distributors have supported the original idea of the Department of Media and Advertising. PDA created a special working group to work in this direction, open its funding. Over the past two months, in close contact with the department within the approved "road map", a number of projects were implemented by the working group.

However, on this year  October 14th meeting at the Department of Media and advertising a position of lawyers was voiced, which changed radically the conditions for the implementation of the project. In their view, the replacement of he press kiosks is possible only with the following conditions: the advertising agency, which won the auction will own the kiosk and the right to lease land for the facility - also to him. A distributor, who had previously worked here, will only be able to sign the agreement for a period of ten years, paying a rent of 60 thousand rubles per year.

If the level of this payment is still debated today, then it follows from your interview with Julia Georgievna Kazakova, the transfer of the ownership of the kiosk to advertising agency is a closed issue.

Once again I am not an opponent of the proposed project of the total hasty replacement of press kiosks in the city. However, I want to pay particular attention to the risks and threats that today, even at the stage of project development, is an imperative to take into account. Otherwise, what is the guarantee that we’ll not get a second rocket "Proton -M": like changed to be improved, but it took off and exploded in the first minutes of flight ...

- Are there a lot of these risks? What are they ?

- Okay , I'll try to show every possible problem areas and possible solutions.

The first problem: the question of the value and nature of the press distribution business. What 's it like to represent and how much will it cost after the implementation of the proposed program? I understand the desire of advertisers while investing a lot of resources so as to have ample opportunity to monitor ... However, if the distributor today, first of all, has a contract with the city and the city services, and secondly, is the owner of the real property in the form of kiosks , after the implementation of the proposed auctions, contracts he would have been a commercial structure and more - will be deprived of his property.

Of course, in theory, the distributor may carry the old stalls to other places, but in practice this is impossible, since he just has no other places. It turns out that in essence the operation is a property take away! That is actually an expropriation and a blow to the business.

Of course, in this hopeless situation the distributors eventually will come to terms with the loss of property. But what about the replacement of contracts with state agencies to contracts with a commercial organization?

- Why does it scares you ?

- We all live in the Russian business environment. And if you really approach this issue, the chances, that after a while the owner of the kiosk in the face of the advertising agency will modify the terms of the contract, are extremely high. He has all the rights for that. And it does not cost anything , for example, to raise the rents. As if that was not spelled out in the tender documentation, the Russian laws are such, that with a presence of a competent legal assistance you can always find a loophole. And if you will not agree to the new terms – you’ll be kicked out of the kiosk. And you have prove nothing ... Experience shows that a strong, financially strong opponent, but still possessing the administrative resource, never loses in the court. Never! Mark my words: such a situation arise, the courts will take years .

- You do not exaggerate ? Indeed, encumbrance will be registered in the tender documentation ...

- Please note that the auction will be raffled off for the right to install city-formats and placement of advertising space. That is today's press distributor’s business tomorrow will take a risk to become a business on advertising ! Yes, in the auction will be an encumbrance on the need to conclude an agreement with the Distributor and the organization of press sales. But this is only an encumbrance! ...

- With such conditions and such risks it is scary to imagine what will become the distributor’s business ... Will it be worth anything?

- I can not say exactly how much, but at best, several times less, if not for a degree than it is today.

- Well, there must be at least some positive aspects in a program offered ... for example, they want to increase the number of points.

- The Department of media and advertising , and the city government as a whole, not only do hold a lot of work for the conservation of kiosks and media outlets, but also plan to increase their number, having achieved a measure formulated by the Ministry of Communications in the Order number 197 of July 31, 2013 : one press stall for a one and half thousand people. However, the implementation of the project of total and rapid-fire replacement of the press kiosks in the form in which it is offered today, the number of objects not only did not increase, but even decrease. Moreover, it is possible that sustainable.

- Why ?

- There are several reasons . The first - the proposed model is highly questionable in terms of working in a cold season. Retail premises, designed by "Kardos" have an open display, that has been done on the French kiosks model. But in France, the climate is very different - there is a lot warmer there. Therefore, if in the summer, such a model will show growth of sales, in winter , on the contrary, will lead to the reverse dynamics. By the way, in St. Petersburg a few years ago, a similar experiment was carried out - there are also experiencing the French model. Fortunately, then experimented not on the whole network, but only on a few sites. Now, with the onset of late autumn they all were closed down as unprofitable in mind : not only do the vendors were cold and sick, as well as the goods come into disrepair.

Of course , the developers of the objects for Moscow now swear that everything will be fine. However, the initiators of the experiment in St. Petersburg just swore the same.

Believe me, if next spring, as the city government plans, all the stalls of the press in Moscow will be replaced on the now proposed, then by December 2014 , with the onset of a more or less strong frosts, half of the urban press retail network will be closed. Way out of this situation is quite simple: there is no need to replace the entire network at once, but just set experimentally with a dozen stalls. And it must be done now so, that upcoming winter will give a clear idea of the feasibility of using this particular design of the shopping facility. Thus, in April and May, we will have data on their trial operation, will be able to fix something in the design or even develop a new object.