Weekly 21 February 2021

Clubhouse frenzy

Hello! This week our top story is a look at social media app Clubhouse and why it has seen such an extraordinary surge of interest among Russians. We also have the details on another Navalny trial, this time over alleged slander of a war veteran, and the first Russian ever to be worth over $30 billion

Watch now! Last week, our newsletter included highlights from an interview The Bell founder Elizaveta Osetinskaya did with one of Russia’s most famous, and media shy, investors — Yuri Milner. We’ve now added English subtitles so you can see the whole video interview yourself.

Russians rush to join Clubhouse 

Clubhouse took off in Russia this week. The social network saw the audience for its audio-chat service increase 20-fold as big brands and top managers from major companies signed up. The former head of Russia’s financial regulators even appealed for Central Bank Governor Elvira Nabiullina to get involved. The amount of coverage Clubhouse received in Russia’s biggest media outlets increased every day.

What happened?

The app has opened up a new way to reach influential individuals. Oleg Tinkov, founder of Tinkoff Bank, can be found roaming chat rooms, while other popular users include the entire top management of internet giant Yandex and the usually taciturn president of chess federation FIDE, Arkady Dvokovich.

Perhaps surprisingly, Clubhouse has largely remained free of overt Kremlin propaganda. Vladimir Solovyov, a notorious pro-Kremlin TV presenter, may have been the first to try and use the app as a sounding board for the authorities. But the network blocked his account in response to user complaints.

Major companies were quick to get involved. State-owned VTB, Russia’s second biggest bank, set up a room about investments last week. While state-owned Sber ran a live recruitment drive for a PR expert, Yandex hosts themed rooms every evening, and internet group Mail.Ru Group ran a tech show.

S7 Airlines, which traditionally sets the tone for aviation marketing, offered ‘virtual flights’ on Clubhouse: the bustle of the airport, the roar of the engines and crew announcements as ‘passengers’ got on flights to Rome, Bangkok or Reykjavik. At the end of the flight, ‘passengers’ get a promo-code for bonus air miles. Online retailer AliExpress set-up a popular room about ‘finds’ in its catalogue.

Who is making money?

So far, no-one has cashed in on Clubhouse, but commercialization is only a matter of time. Popular moderators on Clubhouse told The Bell they are already getting offers of up to 100,000 rubles ($1,350) to work within the app. The next step will be advertising in popular chat rooms. 

What’s the secret of its success?

It’s not easy to explain why Clubhouse has become so popular in Russia, and the reasons seem to be similar to everywhere else in the world: it offers an alternative to endless video calls and is a nice substitute for a lack of in-person communication. But it is also an opportunity to reach influential people, and provides a more sophisticated platform to create and share expertise compared to traditional podcasts (on Clubhouse, you find specialists available for conversation in themed rooms). 

Investors told The Bell that the hype around Clubhouse is more than just a flash in the pan: this is the fastest growing app in the last five years. But it’s still something of a mystery why Clubhouse, rather than other similar projects, has taken off. Similar platforms with Russian origins, such as audio chat on Telegram or Stereo, created by Badoo founder Andrei Andreyev, lag far behind — even despite stunts like Andreyev offering grants of $25,000 to the most popular contributions on his network.

Why the world should care 

If investors are right and enthusiasm for Clubhouse doesn’t quickly fade, the network will become another important source of information about Russia and a powerful new way of reaching a Russian audience.

 

The other Navalny trial

In recent weeks we’ve written a lot about opposition leader Alexei Navalny and his supporters: street demonstrations in his support, and the jail term handed he received in place of an earlier suspended sentence. But Navalny has also been ensnared in another court case, accused of insulting a Second World War veteran. A four-day hearing ended Saturday with a fine. We look at what the case was about, why it’s as important as it’s absurd, and what it has to do with state-owned network Russia Today.

How it began

In the build-up to the constitutional referendum last summer, Russia Today broadcast a clip in which various people explained why they were voting ‘yes’. Navalny reposted the clip on Twitter and described the participants as a “bunch of corrupt lackeys”, “the shame of the country”, “people without conscience” and “traitors”. Among those in the clip was Ignat Artemenko, a 94-year-old veteran. This resulted in the powerful Investigative Committee opening a libel case against Navalny on behalf of the pensioner. 

How it developed

From the first hearing on Feb. 5, it was a spectacle of the absurd. The offended veteran used a video link and wore a mask, so nobody could hear what he was saying. He was joined in his apartment by a judge who was supposed to explain the proceedings, but this second judge was never seen on the video link.

According to the prosecution, the veteran was shown Navalny’s tweet by his nurse. “Navalny called me a traitor to the motherland, that hurt me deeply and I need to defend my honor,” said the veteran, calling for an apology. In addition to the nurse and Artemenko’s grandson, another witness was the veteran’s 95-year-old neighbor. The essence of the defense was that Navalny was not speaking about this individual veteran, but about the clip’s participants in general. His words were just a critical opinion. 

In court, Navalny’s behavior was emotional: on the first day, he yelled that the veteran’s grandson was shamelessly using his grandfather. In the end, Artemenko was taken ill and an ambulance was called. The second day of the hearing lasted 10 hours, including breaks. Artemenko himself did not attend but his testimony was read out. In it, he spoke at length about his experiences in the Second World War, including how he lived with Soviet partisans, their unsuccessful attempt to rescue a fellow villager from the Nazis, and how hard it was to sleep in the cold of winter, even when wrapped up in hay. The judge dismissed Navalny’s questions about how all of this was related to the case.

In the third session Saturday things came, finally, to an end. Navalny was fined 850,000 rubles ($11,500) and returned to jail. The same morning, a different court had upheld the recent decision to convert Navalny’s 3.5-year suspended sentence into a custodial term.

What it all means

It was clear from the start that Navalny would lose. The opposition leader said in court the case was “invented by PR people and RT journalists” and referred specifically to RT editor-in-chief Margarita Simonyan. The aim, Navalny claimed, was to portray him as an opponent of “someone significant and sacred”. We do not know exactly how this case was fabricated, but it is a fact that the charges were used extensively in a propaganda campaign against Navalny.

Pro-Kremlin media outlets painted Navalny as someone who had insulted an entire generation of Russians who fought heroically in the Second World War (the conflict being one of the most valued themes for modern propaganda as it’s almost the only historical event on which everyone agrees). A social media flashmob — #weareignatartemenko — was led by regional deputies who rushed to outdo each other and pledged they would “hurry to the front line” against “the fascist Navalny”. As Meduza reported, this was an initiative of the ruling United Russia party.

Navalny’s behavior is more difficult to explain: he played his part in this performance with raw emotion — effectively giving pro-Kremlin media what they were seeking. Maybe he hopes his response will resonate with a younger audience. Or maybe he is simply sick of endless court cases.

Why the world should care 

Since returning to Russia following his poisoning with a suspected nerve agent, Navalny has become — if there was any doubt — the country’s top opposition politician. And the way the authorities treat him is indicative of how they plan to deal with the opposition as a whole. The strategy is clear: marginalize dissent, refuse to take it seriously, and seek to persuade the wider public that any criticism of the government is an attempt to destroy everything Russians hold dear. 

 

Russia’s richest businessman tops $30 bn for the first time

The value of metals magnate Vladimir Potanin topped $30 billion for the first time Tuesday, the first time any Russian has been worth so much. But this was followed by two reverses: first, the company he owns, Norilsk Nickel, was hit with a giant fine, then there was a serious accident at one of its plants.

  • The growth of Potanin’s wealth is linked to a 11 percent rise in the value of Norilsk Nickel shares over the last two weeks. Right now, the top three Russians by net worth are all involved in the metals business: Alexei Mordashov, co-owner of Severstal, is currently worth $28.5 billion and NLMK co-owner Vladimir Lisin is valued at $26 billion.
  • The soaring price of Norilsk Nickel shares has not been hampered by a recent court order ordering the company to pay 146 billion rubles in compensation for environmental damage caused by a fuel spillage last year. The company said it would not contest the fine and Potanin described the verdict as a wake-up call for the wider business community: “I believe our company has learned its lesson,” he said. The news did not cause any major changes in the share price.  
  • This was followed by another setback when the partial collapse of a Norilsk enrichment plant Saturday killed three workers. Potanin blamed factory management, complaining they “grossly violated safety regulations”. Unlike the fine, this did put downward pressure on the share price.

Why the world should care  

Potanin is not only Russia’s richest businessman, but one of the country’s most iconic. His story is the story of post-Soviet history: he was behind the ‘loans-for-shares’ auctions of the 1990s and helped get then-president Boris Yeltsin re-elected in 1996. While he made his fortune in natural resources, his interests have expanded into new areas. His Petrovax is the Russian partner of CanSino Biologics and might be the first company outside China to bring the Chinese coronavirus vaccine to the market.