Identifier
Created
Classification
Origin
07MOSCOW5475
2007-11-21 14:46:00
CONFIDENTIAL
Embassy Moscow
Cable title:
THE RUSSIANS ARE COMING, WITH AN AMERICAN ASSIST
how-toVZCZCXRO2541 PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR DE RUEHMO #5475/01 3251446 ZNY CCCCC ZZH P 211446Z NOV 07 FM AMEMBASSY MOSCOW TO RUEHC/SECSTATE WASHDC PRIORITY 5394 INFO RUCNCIS/CIS COLLECTIVE PRIORITY RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY RHEHNSC/NSC WASHDC PRIORITY RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005475
SIPDIS
SIPDIS
DEPT FOR EUR/RUS, NSC FOR WARLICK
E.O. 12958: DECL: 11/02/2017
TAGS: ECON PREL EINV RS
SUBJECT: THE RUSSIANS ARE COMING, WITH AN AMERICAN ASSIST
Classified By: Econ MC Eric Schultz for Reasons 1.4 (b/d)
-------
Summary
-------
C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005475
SIPDIS
SIPDIS
DEPT FOR EUR/RUS, NSC FOR WARLICK
E.O. 12958: DECL: 11/02/2017
TAGS: ECON PREL EINV RS
SUBJECT: THE RUSSIANS ARE COMING, WITH AN AMERICAN ASSIST
Classified By: Econ MC Eric Schultz for Reasons 1.4 (b/d)
--------------
Summary
--------------
1. (C) Andrew Paulson, an expatriate American businessman in
Moscow told Econ MC November 12 that his Russian-based
internet company, Livejournal.ru, was preparing to purchase
the U.S. version of Livejournal, from which it had sprung
eight years ago. Paulson said the USD 100 million or more
purchase was the first of an American media company by a
Russian company. End Summary.
--------------
An American in Moscow
--------------
2. (C) Paulson said he came to Moscow 14 years ago from Paris
with a background in publishing, a few dollars to invest, and
very little Russian. He subsequently opened three magazines
in Moscow: a culture magazine, a travel magazine, and a city
guide. All three magazines were geared toward Moscow's
affluent young, and all of them were quite successful. He
sold the magazines two years ago for a substantial profit and
decided to invest in the internet.
3. (C) Paulson said he used the proceeds from the sale of the
magazines along with funds from Russian investors to finance
the purchase in 2005 of "Livejournal.ru," which he described
as a "social network." According to Paulson, the original
Livejournal is a popular website in the United States. One
of its owners established the Russian off-shoot in 1999.
However, Paulson said the site had been neglected by its
previous owners, who had failed to see its potential, and he
was able to acquire it at a discount.
4. (C) Paulson said Livejournal.ru now averaged 7 million
hits a month, making it the fourth most frequented site in
Russia. Moreover, the first three sites were search engines,
making Livejournal.ru the most popular content site in
Russia. The site was an entirely neutral platform when it
came to content: it had 85-90 weblogs on the site, some
political but the majority cultural. It was also free,
requiring only that users register and sign in.
Livejournal.ru made its money off of advertising. Paulson
noted that the company also made money off of not
advertising, noting that for USD20 a month the site's
clientele would be able to block all advertising.
--------------
Ready to Expand -- Into the U.S.
--------------
5. (C) Paulson said livejournal.ru had been so successful
that he was now moving to purchase the U.S. site from which
it had sprung. The purchase of Livejournal.com, which would
be for in excess of USD 100 million, was to be announced at
the beginning of December. It would mark the first time that
a Russian media company had invested in the United States.
--------------
The Internet and Media Freedom
--------------
6. (C) Paulson observed that the internet was the last
bastion of free media in Russia. His theory as to why it was
allowed to operate without interference was that the
government monitored Livejournal.ru and similar sites in
order to keep abreast of public opinion. In addition, he
maintained that the Putin government was secure enough to let
an elite phenomenon like Livejournal.ru operate without
interference, whereas anything that appealed to the masses,
such as newspapers and especially television, they were quick
to control. He argued that a final factor was that unlike in
China it would be extremely difficult for the GOR to censor
the internet in Russia given how integrated it was with the
internet in Europe.
7. (C) Paulson added that it was a point of pride for him
that he never took any payment for content for any of the
magazines. He recounted a story of printing a critical
review of a restaurant with mafia links and being threatened
by the manager. Paulson said he arranged a meeting with the
Mafioso who owned the restaurant who read the review, turned
to his manager and said "But it's all true. Fix it!"
Paulson said he insisted that even his shareholders had no
MOSCOW 00005475 002 OF 002
control over content, a practice he has continued in his
current venture and that will extent to his company's new
acquisition.
BURNS
SIPDIS
SIPDIS
DEPT FOR EUR/RUS, NSC FOR WARLICK
E.O. 12958: DECL: 11/02/2017
TAGS: ECON PREL EINV RS
SUBJECT: THE RUSSIANS ARE COMING, WITH AN AMERICAN ASSIST
Classified By: Econ MC Eric Schultz for Reasons 1.4 (b/d)
--------------
Summary
--------------
1. (C) Andrew Paulson, an expatriate American businessman in
Moscow told Econ MC November 12 that his Russian-based
internet company, Livejournal.ru, was preparing to purchase
the U.S. version of Livejournal, from which it had sprung
eight years ago. Paulson said the USD 100 million or more
purchase was the first of an American media company by a
Russian company. End Summary.
--------------
An American in Moscow
--------------
2. (C) Paulson said he came to Moscow 14 years ago from Paris
with a background in publishing, a few dollars to invest, and
very little Russian. He subsequently opened three magazines
in Moscow: a culture magazine, a travel magazine, and a city
guide. All three magazines were geared toward Moscow's
affluent young, and all of them were quite successful. He
sold the magazines two years ago for a substantial profit and
decided to invest in the internet.
3. (C) Paulson said he used the proceeds from the sale of the
magazines along with funds from Russian investors to finance
the purchase in 2005 of "Livejournal.ru," which he described
as a "social network." According to Paulson, the original
Livejournal is a popular website in the United States. One
of its owners established the Russian off-shoot in 1999.
However, Paulson said the site had been neglected by its
previous owners, who had failed to see its potential, and he
was able to acquire it at a discount.
4. (C) Paulson said Livejournal.ru now averaged 7 million
hits a month, making it the fourth most frequented site in
Russia. Moreover, the first three sites were search engines,
making Livejournal.ru the most popular content site in
Russia. The site was an entirely neutral platform when it
came to content: it had 85-90 weblogs on the site, some
political but the majority cultural. It was also free,
requiring only that users register and sign in.
Livejournal.ru made its money off of advertising. Paulson
noted that the company also made money off of not
advertising, noting that for USD20 a month the site's
clientele would be able to block all advertising.
--------------
Ready to Expand -- Into the U.S.
--------------
5. (C) Paulson said livejournal.ru had been so successful
that he was now moving to purchase the U.S. site from which
it had sprung. The purchase of Livejournal.com, which would
be for in excess of USD 100 million, was to be announced at
the beginning of December. It would mark the first time that
a Russian media company had invested in the United States.
--------------
The Internet and Media Freedom
--------------
6. (C) Paulson observed that the internet was the last
bastion of free media in Russia. His theory as to why it was
allowed to operate without interference was that the
government monitored Livejournal.ru and similar sites in
order to keep abreast of public opinion. In addition, he
maintained that the Putin government was secure enough to let
an elite phenomenon like Livejournal.ru operate without
interference, whereas anything that appealed to the masses,
such as newspapers and especially television, they were quick
to control. He argued that a final factor was that unlike in
China it would be extremely difficult for the GOR to censor
the internet in Russia given how integrated it was with the
internet in Europe.
7. (C) Paulson added that it was a point of pride for him
that he never took any payment for content for any of the
magazines. He recounted a story of printing a critical
review of a restaurant with mafia links and being threatened
by the manager. Paulson said he arranged a meeting with the
Mafioso who owned the restaurant who read the review, turned
to his manager and said "But it's all true. Fix it!"
Paulson said he insisted that even his shareholders had no
MOSCOW 00005475 002 OF 002
control over content, a practice he has continued in his
current venture and that will extent to his company's new
acquisition.
BURNS