Print is Dead! Long Live the Media!

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The State Statistics Committee of Azerbaijan has published media revenues from advertising for 2020.

Just like in 2019, the report for 2020 has been drawn up in such a way that it is difficult to establish the volume of advertising in print, online media. Television and radio are combined under the heading of television and radio, and telecommunications are combined with postal orders, periodicals with written notifications, printed and audiovisual products.

This approach does not make it possible to analyze the state of each area of ​​the media. The actions of the State Statistics Committee (SSC) actually veil the picture of the true state of the media advertising market in Azerbaijan, which has been steadily difficult for more than 20 years.

In 2020, the media received 11 million 843.4 thousand manats (6.966 million US dollars) from the distribution of advertising. Compared to the previous year, revenues increased by 21.9%.

TV and radio companies earn the most from advertising - 10.538 million manats. Last year, their income grew by 37%. In general, TV and radio accounts for about 89% of the media-advertising purse.

As noted above, since 2019, the SSC has revised the statistics of advertising revenue for periodicals. This category includes income from advertising activities on various notices, printed and audiovisual products. Thus, the distributors of advertising in these categories earned 1 million 23.6 thousand manats ($ 602 thousand). How many newspapers and magazines were extracted is not known. In 2018, the column for print media included 1,000 manats of advertising money.

Advertising distributors earned 281.6 thousand manats through telecommunications and mailing, by 4 times less than in 2019.

In general, the share of mass media in the structure of advertising revenues for 2020 amounted to 15.6%. Revenues from advertising activities in the country amounted to 75.6 million manats, an increase of 4.4%.

Even with such a veiled form of stating the volume of the media advertising market, it is clear that the situation has not improved at all, and continues to remain catastrophic.

Unprecedentedly low share of media advertising in the GDP

In 2020, Azerbaijan's GDP amounted to 72.4 billion manats ($ 42.6 billion).

The share of media advertising in the GDP was 0.016% at an international rate of 1% of GDP. For example, in the USA it amounted to 1.05% of GDP (media advertising $ 214.6 billion, GDP - $ 20.937 trillion), in Russia - 0.5% of GDP (media advertising $ 6 billion, GDP - $ 1.483 trillion).

Advertising revenue per capita - 0.013 manat ($ 0.0076). In the USA - $ 653, in Russia - $ 46.

Ideally, the market for domestic media advertising should not have amounted to 11.8 million manats, but 724 million manats (American standard) or at least 350 million manats (Russian standard).

From the beginning of the century until 2015, the volume of the Azerbaijani media advertising market in relation to GDP has stably fluctuated within 0.1%, despite the more than 10-fold growth in GDP, provided by an increase in oil revenues. This stable ratio is an important proof of government control and management of the media advertising market.

Reasons for the degradation of the media advertising market

In Azerbaijan, it is impossible to achieve the international standard of correspondence between the volume of the media advertising market and the GDP for a number of reasons - both economic and political.

First, it is not profitable for the authorities, who are interested in information management and disorientation of society, to have a large and free advertising market, since this threatens the formation of financially and, therefore, politically independent media, as it was already in the 90s of the last century.

Second, the energy-dependent economy is unable to stimulate the development of advertising to international standards. The share of energy resources in GDP from 2005 to 2020 decreased from only 67% to 40%, and the dependence of the economy on oil continues to remain high. Energy resources account for 87% of the export structure. The revenues of the state budget of Azerbaijan in 2021 will amount to 24.327 billion manats ($ 14.3 billion). At the same time, 13.95 billion manats ($ 8.2 billion) or 57.3% will be supplied by the oil sector. The great share of this amount - 12.2 billion manats ($ 7.2 billion) or 87.5% - will be transfers from the State Oil Fund of Azerbaijan. This indicates the low potential of real advertisers who are concentrated in the non-oil sector. The main supplier of advertising for small and medium-sized businesses occupies a 10% GDP niche, while in developed countries they account for up to 70%, and in some even up to 90%. In developed countries, it is small and medium-sized businesses that act as the backbone of the economy and the driving force behind advertising.

Third, Azerbaijan, as an authoritarian state, is not interested in the development of a free economy, free trade and free competition, which for objective reasons is a threat to the regime. Economic freedom inevitably leads to freedom of the individual, freedom of speech and, finally, to political freedom. It is no coincidence that the undermining of the independence of the media in Azerbaijan began with the destruction of their economic foundations, economic self-sufficiency.

Fourth, the "gray" economy of Azerbaijan forces the majority of potential advertisers to conduct their business as much as possible behind closed doors, in a semi-legal state, so as not to attract excessive attention of the fiscal authorities.

Fifth, due to the above reasons, the advertising culture has practically been destroyed in the country. Even businesses in need of them are unaware of the power of its influence and consider it a burden.

The murder of the print

In 2020, the process of killing the print entered its final stage. The policy of suppression of independent and opposition print media, which began in 1998, resulted in their death. Today newspapers and magazines have been brought to a critical financial condition and can exist mainly only through illegal and legal subsidies from the government. Most of the newspapers are sold at retail in dozens, less often hundreds of copies from each issue, and the overwhelming majority of them have no advertising. Among the economic levers used over the years to destroy print media are higher prices for print materials, publishing services, and print distribution services, destruction of the newsstand system, street sales, and a ban on advertising.

A platform is being prepared to transfer print media to electronic format, the Media Development Agency told Turan. This year, the agency is providing assistance to print media for the last time.

Conclusions

Thus, we can state that the economic strangulation of the media continued in 2020. At the same time, the authorities continued the practice of illegal financing of media. This thesis is justified by the fact that it is impossible to feed dozens of TV, radio, hundreds of online media and print media out of 12 million manats of advertising. Considering the secret attempts of the authorities to adopt a law on media that restricts freedom of expression, it can be concluded that no legal improvement in the economic situation of the media is foreseen.

How to end poverty

It is possible to improve the economic situation of the media in a short time with the support of the state, but not in the form that the Fund for State Support for the Development of the Media did and the Media Development Agency continues to do. The financial aid system, which I have criticized since its inception in 2009, has proven disastrous and hastened the degradation and demise of print media. If this practice continues in relation to online media, their fate will be the same. A different approach is needed to strengthen the media in economic terms, to improve the media in moral and professional terms; to ensure the interaction of the media and the state, to improve the quality of the economy and socio-political relations, increase the interaction of the media and NGOs, which will increase the role of the civil sector and the effectiveness of its projects.  Then talk is about reanimating the advertising media market.

Ways of reanimation:

1. Public advertising

2. State advertising

2. Mandatory advertising of commercial structures

3. Information support of NGO projects

Public (social) advertising is an important type of non-commercial advertising aimed at changing the behavior of the environment and society in the direction of eliminating negativity in certain areas, improving the situation and personality. In the conditions of Azerbaijan, as a developing new state and nation, public advertising should have an educational, formative, solidarizing character. Its wide and systematic use through the media will strengthen internal creative processes and dramatically increase the effectiveness of the implementation of the goals and objectives of the state and society.

The allocation of money for public, state and commercial advertising should not be regarded as patronage on the part of the state. Every dollar invested in advertising brings in a profit of $ 2 or more. For example, a public campaign for the introduction of gas meters in Azerbaijan, initiated by me in 2004 with elements of social advertising, led to the implementation of this idea by the state and a threefold decrease in gas consumption by the population. The work done by public organizations and the media that supported the project had an effect on hundreds of millions of dollars and removed the social problem.

I suggest allocating:

- for public media advertising AZN 100 million, which will be directed to the media promoting a healthy lifestyle, clean environment, etc.

- for state media advertising for information assistance in the implementation of state programs, projects, decisions in the amount of 2% of the budget of such programs, projects and decisions. The amount is within the 100-200 million manats.

- for non-commercial advertising in the amount of 10% of the NGO project budget for the purpose of providing information support to the project, increasing its effectiveness and promoting its results. NGO projects are usually related to the social sphere and the activities of state institutions.

 - for commercial advertising 2% of 20% income tax. That is, the amount of income tax is reduced to 18% with the obligatory condition of sending the remaining 2% to self-promotion of a commercial entity. In 2020, the tax on profits of commercial entities amounted to 2.2 billion manats.

It would be necessary to exempt media advertising from tax until the situation in the advertising market improves.

The money for advertising will cause strengthening the economic foundations of the media, the growth of the economy, an increase in the profits of business entities, an increase in the efficiency of state and public programs and projects, the creation of an advertising culture, and the stimulation of the commercial advertising market.

Such support for the media should cause the approval of the professional and ethical standards of journalism in the media, stipulated by the Rules of Professional Conduct of a Journalist in Azerbaijan, adopted at the first congress of the Press Council in 2003:

Principle 1: Serving Truth, Accuracy and Objectivity

Principle 2: Respect for Sources of Information

Principle 3: Protection of honor and dignity, privacy

Principle 4: Protecting the reputation of the journalist himself and the body in which he works

The mechanism for inviting the media to comply with the Rules will be the refusal to provide them with the above advertising support. Media violating the Rules may be deprived of the right to receive advertising.

By applying these two mechanisms: commercial and ethical in nature, we can achieve a healthier media and make them quality, responsible, self-sufficient and independent.

All these measures are extraordinary. The main task of the state is to form a healthy economy capable of providing the golden 1% of the commercial media advertising market from the country's GDP.

The program of advertising support for media and the improvement of the commercial market for media advertising should be carried out by the Media Development Agency. This is a difficult task, but worth it.

Mehman Aliyev, Director of Turan News Agency