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Interview in the magazine Expert NW
27 September 2004 . No. 36

- You have headed the Hermitage since 1992, when market reforms were just beginning. Did it take you very long to part with the illusion that a state museum should exist solely on state budgetary allocations?
- That is no illusion. It is actually a firm conviction which we hope to put into practice: a state museum should live entirely on state financial support and open its doors to the public free of charge. When the state collects taxes from the population, it assumes the obligation to provide three basic services: to ensure protection against foreign and domestic threats to security, and to protect the cultural heritage of the population. The last of these functions involves safeguarding the normal functioning of museums. It is fine if museums can earn money but this is not their duty; it is an act of good will, a sort of assistance to the state. Unlike commercial enterprises, a museum does not earn money for the sake of profit and we always should be aware that there are bounds which should not be crossed. If we are going to properly carry out our mission, we should be reducing our dependence on admission charges. Today about one-third, and sometimes half of our visitors enter the Hermitage free of charge. These are school children, university students and Russian retirees. We also have one day a month when no admission is charged. At the same time we are constantly lobbying the government to raise the state’s share in covering the museum’s financial needs.

- There are rumors that starting next year the Hermitage will no longer figure as a separate entry in the state budget, and that will make it all the more difficult to defend allocations to the museum…
- In the state budget for 2005 the Hermitage keeps its separate entry, though a restriction has appeared: now we will be doing our planning via the Ministry of Culture rather than directly with the Ministry of Finance. However, it is true that there is a movement afoot to eliminate our status as a separate budgetary item and we will continue to oppose this. The Hermitage is in a category of its own and I say this even if some people consider it cheeky. We are the only universal museum in Russia having worldwide importance, while at the same time we are a symbol of Russian statehood. Thanks to this status and to Presidential patronage, the Hermitage has great prospects for further development and can receive respectable amounts of financial assistance. Almost any project we initiate has a minimal cost of one million dollars! If we are not treated as a separate line in the state budget but instead lumped together with other items, then our future financing will become less clear as funds are constantly re-allocated. We have known instances when half the amounts assigned to the Hermitage by decrees signed by the President were then taken away by bureaucrats and spent on other things.

- What are the respective shares of the Hermitage’s budget covered by state and non-state sources?
- Approximately 60% is paid by the state and 40% by the Hermitage from its own earnings. I think this is an almost optimal correlation, although perhaps I might prefer it to be 70:30. In past years the share covered by the Hermitage was 50, 60, and even 70%, but these bad proportions arose because the state withheld funds. Over time the sums transferred to us by the state grew and over the past 5 years everything promised to us has been delivered in a stable manner. There are, of course, limits to what we can earn on our own. There are certain things we simply cannot do to raise money. The Hermitage’s own ability to raise funds amounts to about 10 million dollars. This comes from sales of admission tickets, licensing, exhibitions abroad and the contributions of sponsors. We have great need of the funds which we earn because this protects our freedom and autonomy. If this money were taken away from us it would be a huge mistake.

- Do you mean the consequences of budgetary reform and subordination of museums to the Treasury?
- Yes. This danger threatens all museums and we have been discussing it in the Union of Museums of Russia. Even today all of our non-state revenues are considered to be part of the state funding and are paid to us through the Treasury. But for the time being they are shown in our separate account. However, we can see clearly that there is a move to put an end to this sort of autonomy and to turn the revenues of museums into an expense item of the state. That is to say the state will pay us from the money we earn or use these earnings to replace state financing (though this was forbidden by prior laws and statutes on museums). This will be fatal to museums. Sponsors will not give us money if they know that they are merely replacing state funds; our contracts these days specifically mention this. Museum staff will be deprived of incentives to work better and more creatively. It’s one thing to think up ways of increasing revenues of your own museum for construction, restoration and repairs. It is quite a different matter if you know the state is taking over the proceeds. This will leave no incentive to reach higher and further, to work more. Any petty shift subordinating us to the Treasury will seriously put us back. Under the Soviet regime the main problem was not strict control as such, but that control of a great and large museum like the Hermitage was exercised at the level of a an instructor in ideology from the district party committee of the CPSU. And today Treasury officials who cannot take any decisions will only get in the way at institutions which have grown used to operating independently. This pertains not only to the Hermitage but also to all other museums. There can be no doubt that our museums have managed not only to survive but even to flourish and grow (to the envy of Western museums) mainly due to the large degree of financial and ideological autonomy they enjoy today.

- In this situation the economy simply reflects modern-day politics, wouldn’t you say?
- I think it is precisely so. Nonetheless, we should try to ensure that politics do not get in the way of the economy or do not go off in an unhealthy direction.

-Let’s return to the question of the Hermitage’s budget. When you are dealing with potential sponsors among businessmen what criteria do you apply as you agree on implementing one or another project? Where is the boundary between what is permitted in earning money and what is not?
- The limits are determined by each museum itself and this is both an obligation and a responsibility. We conduct very detailed, sometimes even very tough negotiations and we precisely set down in our contracts everything that the sponsor may do, and what he may not do. Western sponsors have been well brought up and do not ask too much: they are satisfied to be associated with the name or brand of the Hermitage, to have their logotype in catalogues, to participate in organizing exhibitions.
For example, no one can rent rooms in the Hermitage to hold celebrations or receptions, although almost all museums in Russia and in the world at large do this. We only allow receptions that are organized by the Hermitage itself on the occasion of the opening of an exhibition or to mark the completion of joint projects with our sponsors. But no one is permitted to rent a hall in the Hermitage to celebrate a birthday.
We try to avoid open advertising. We do not allow the positioning of an auto in front of the museum for advertising purposes. But we can exhibit a BMW inside the museum when it has been painted by Andy Warhol, knowing that this will please the German automobile manufacturer. And we plan to continue such an approach to painted BMW’s in the future as well. One company we successfully cooperate with offered us large sums of money to place their outdoor advertising on the scaffolding which was put up on our building. But we decided that this is inappropriate since it would mean someone in a boat on the Neva could photograph an enormous advertisement against the backdrop of the Hermitage.
What we are talking about is an inner sensation determined by a sense of snobbism. There are no hard rules in these matters and we will never condemn another museum for doing what we will not ourselves do. Everyone has his own situation, his own traditions and his own taboos.

- Nonetheless, wouldn’t you say that the Hermitage does essentially trade on its brand image when it allows its symbols to appear on cans of Coca-Cola?
- The Hermitage’s symbols appear on bottles of red wine that we order specially in Italy, in Tuscany. We cannot use the name "Hermitage", because it is a registered trade mark, and that is why we have labeled the wine as "Pecelli for the Hermitage." (Pecelli is the town where it is produced.) We treat our guests to this wine and it is served in the Hermitage restaurant. By the way, someone can market candies bearing the name "Hermitage", assuming, of course, that they pay us for the license and that we approve of their quality!
As regards Coca-Cola, they are our long-time sponsor. They are very proper and never do anything that is not permitted. The series of Coca-Cola cans bearing the images of the Hermitage and texts devoted to the protection of landmarks are so good we could have paid for them ourselves! In general this was not so much an advertisement for the Hermitage as it was a promotion of our mission of safeguarding the cultural heritage. And it is very good that these cans have had such a great success across Russia and are now being " issued" for a third time.
One other successful example is linked to IBM, who spent at least 5 million dollars developing the Hermitage’s web site (the world’s best!), our on-line store, and the Virtual Academy. What can we do to pay them back? Once a year IBM takes its major clients to the Hermitage. The guests are shown around the halls, and the site is demonstrated together with all sorts of technical innovations. With the Hermitage as a point of reference, representatives from IBM show what can be achieved in other situations and to satisfy the various needs of clients.

- One point of pride at the Hermitage is the group of powerful companies which have become its strategic partners. How is this group formed? How is it that among the friends of the Hermitage we find well-known Russian oligarchs?
- The principle is that we don’t make any invitations. People come to us and ask to join. Of course, companies wishing to cooperate with the Hermitage don’t descend from Heaven. We often enter into lengthy negotiations and just as everywhere in the museum world this is considered one of the most important tasks of the director. The Hermitage is active and shows itself off in many venues. As a result people constantly come to us with proposals. Usually this begins with small suggestions which then expand, as does the scope of our cooperation.
For example, the PR Department of Interros wanted to help the Hermitage with its publishing program. They started by financing the publication of books. This went well and persons at a higher level became interested. After a number of meetings were held with Vladimir Potanin, we agreed that Interros will become our partner in the Great Hermitage project, taking care of part of the funding and acting as a consultant. Along the way we found a number of side projects such as the purchase of Malevich’s Black Square.
Oleg Deripaska came to us of his own initiative starting with a tour of the Hermitage. When we got to the question of what he might do for the museum, we suggested a number of different items from our "menu": restoration work, exhibitions abroad and in Russia, where they are especially appreciated. As a result the brilliant project of The Hermitage in Siberia was born. The company Bazovy Element provided the funds for arranging exhibitions in cities where it has economic interests. Two of our exhibitions were staged successfully in six Siberian cities and this experience pleased everyone. Now we are in negotiations over a series of exhibition projects for the South of Russia.

- How significant is revenue from visitors to the museum in the overall structure of the Hermitage’s budget?
- This is a very important share of our revenue. Ticket sales account for about one-third of all non-state funds, that is about 3 million dollars per year. We include in this figure revenue from overseas exhibitions.

- Representatives of the tour business do not understand why the Hermitage does not want to earn more from tourist groups, why it limits access to the museum…
- I think that the 2.5 million visitors who now come to the museum (mostly in the summer season, I might add) are the outer limit. I see crowds walking with flags in the Hermitage and I know that they are bringing the money that pays for us. But I also know that someone who has especially come to us to see a Rembrandt will not see it if the halls are thronged by endless crowds of visitors. Here you have to observe a delicate balance…Most likely we will get additional capacity when we fully open the General Staff building.
The tourist agencies are being rather sly. We love to earn money and we use all appropriate methods to do this. If the tourist agencies need to bring groups of visitors during morning or evening hours, they can do this, but they should be prepared to pay more for the service. Instead they just suggest we extend our opening hours and admit people at all hours without extra compensation. We cannot agree to this. One more thing. I am certain that we should not be chasing after quantity but going for quality and value of the services we offer. This naturally will also enable the tourist companies to earn more. Petersburg can easily turn into a second Prague, which in the last few years was nearly swept away by a tide of cheap tourism

- Has your creation of a virtual store turned out to be profitable? And what about the trade in souvenir products as a whole?
- This is not something we run. Rather it is operated by companies who are our partners. The virtual store was created and IBM helped us to develop the technology. There are companies which respond very efficiently to orders that come in. In the course of two or three days they deliver the goods. The store does not bring in much profit, but it does not lose money, and that is already an achievement.
At the same time we created a so-called internet store as a show-case. The fact is that for many years the shops in the Hermitage could not take root. Whatever we tried ended badly. The Winter Palace just drove away all commerce! Then I suggested to a company having an internet store to take up the sale of goods directly in the Hermitage. As a result a fine shop appeared and it now occupies almost the entire Jordan Gallery. The Hermitage’s electronic store is essentially a display case for the internet shop where ordinary commerce is done with the help of computer technologies. The assortment of books on art is the best in the city. The Hermitage receives a decent income from the sales turnover. By the way, we also have several other partners who run a number of small stores, the cafe and restaurant, all of which pay us rent for their premises and also for the use of the Hermitage brand, in a manner of speaking.

- Who produces the souvenir goods bearing the label"The State Hermitage" and under what conditions?
- Mainly this is done by the electronic store on the basis of a license they received from us. But we are also prepared to license other companies which may wish to use the name of the Hermitage on certain replicas of our exhibits. The Metropolitan Museum of Art does this. So far we receive 1,520,000 dollars a year from such licensing. In Holland there is a company which we have authorized to grant licenses for production of goods bearing the Hermitage label. This business continues to grow, although so far we have not succeeded in setting up our own stores.

- Does the Hermitage sell off any items to help pay for acquisitions the way collectors and some other museums do?
- The answer is a categorical "no", although I hasten to add that in some places, such as America, this is considered perfectly normal. I am convinced that such things should never be done, that this is amoral and criminal. We have had the tragic experience when the Soviet government sold off art works from the Hermitage and other museums on the grounds that they were second-rate items. And once you let the market enter the temple, you cannot stop it: it exerts its sway and in the pursuit of money people start urging the sale of real masterpieces. There are arguments against this practice on what I would call the philosophical plane. No one has full property rights over a cultural heritage. We have received it from previous generations and we should preserve it and develop it to hand on to future generations.

- Is the Hermitage’s creation of branches in Western Europe and America a sort of international PR or is there some interesting business in it for you?
- The main thing is to be honest with yourself in the moral sense. Our policy is built on making the Hermitage collection as accessible as possible. We organize exhibitions around the whole world. In principle it is not a complicated matter to arrange an exhibition in some Japanese province and you can earn rather decent fees easily. However, we find the creation of branch museums far more attractive. A permanent place for shows is created. You know with whom you are dealing and you can form a long-term program of exhibitions which we can prepare aesthetically and ideologically. Of course, it is also important that the Hermitage be honorably represented when exhibitions are held and the very fact of having a permanent presence in the cultural life of London or Amsterdam is a weighty factor.
With respect to the business side of things, there are various available solutions. Usually we receive a certain compensation for organizing exhibitions and for our labor inputs in its creation, without regard to the number of visitors. The branches of the Hermitage operate on other principles. In Las Vegas we share the branch museum with the Guggenheim and all the net income is shared between us evenly. (This is just about the only exhibition center in the world where shows are held without assistance from sponsors!) In London we get one pound sterling from each admission ticket sold; in Amsterdam, one Euro.

- It is costing about 40 million Euros to pay for the resettlement of the home for the elderly formerly in the Amstelhof in Amerstdam and for its complete reconstruction to suit museum use. What is the financial participation of the Hermitage in this and how successful are you in attracting funds from local businessmen?
- The share of the Hermitage in projects like this is roughly zero! The funds are provided by organizations which are members of the Friends of the Hermitage Foundations. In Holland we spread the word for a number of years that it would be fine to open a Hermitage exhibition center in Amsterdam. The idea pleased everyone, because it makes real economic sense. The appearance of the Hermitage in Amsterdam immediately created an entire complex of places for tourists to visit on their "second day" in the city. Visiting the Hermitage branch gives tourists a reason to stay on in the city a second day. It also provides a reason for day-trippers who come in to the city to see unique exhibitions which have been prepared just for Amsterdam and will not travel across all of Europe. It should come as no surprise that our project received the active support of the municipal authorities who provided funding. A large part of the money came from the Sponsor Loterij, organizers of the well-known lottery. They reckoned that this is a good cultural project that will pay for itself. Various foundations and sponsors also showed an interest…

-Were the risks and expenses associated with staging the exhibition Ten Masterpieces from the Treasury of the State Hermitage Museum worth it in terms of receipts from the charitable reception arranged by Sotheby’s?
- This year at the end of September there was the first Hermitage Week in New York organized by our American friends. During the course of this week we launched a major fundraising campaign to collect funds for the reconstruction of the General Staff building. Ten remarkable works of jewelry were taken to New York for a very brief period and they were a sensation. They were shown in special exhibition rooms of the auction house Sotheby’s, which is also where the main evening event of the Hermitage Week was held. Those who contributed a certain sum to this charitable cause were given "special access" to these items and they came to the Hermitage dinner. The exhibition in Sotheby’s is no more unprecedented a measure than the opening of our branch museum in Las Vegas was, and it was also initially met with skepticism. Our answer was entirely socialist: art exists for the masses, and the masses are the real Americans in Las Vegas!

- In Russia one of the priorities for developing the Hermitage is reconstruction of the General Staff building. However, we get the impression that this project is going nowhere, at least until a loan is received from the World Bank, which was talked about more than a year ago....
- The project is not veering off; rather it is developing normally considering that things cannot be rushed. The government took its time deciding whether to seek a World Bank loan and only recently gave its approval. In parallel work was going on. Funds were allocated for pre-design work which was finished by Studio 44. Moreover, we brought into the project a number of consultants, Rem Koolhaas’s company AMO . and the Guggenheim Museum. The final project will be ready towards the end of the year and by that time the money should be forthcoming from the World Bank. I hope we will receive $14 million from the Bank as planned, but we will need to find a further $56 million to complete phase one, the reconstruction of the building from the side of the Pevchesky bridge.

- How do you plan to reconcile the concepts of Studio 44 and Koolhaas?
- They are compatible in the same way that work by von Klenze and Stasov are compatible in the New Hermitage. The main distinction in principle is that Studio 44 is proposing a long line of enfilade whereas Koolhaas has the vision of a certain center to the building from which everything radiates. These projects are not so contradictory as they may seem. Now a plan is being elaborated for several entrances to the General Staff building, though the streams of visitors should come together in one place. A lot has changed since the first concept of Studio 44. I hope that in the end everything will be acceptable and show mixed qualities of originality and tradition…

- The Hermitage fully prepared the museum part of the Konstantinovsky Palace. Are you are trying to expand your own influence in this way or were you obliged to undertake this work by political decisions at the highest level?
- We are not looking to take over other people’s territory, but we do not say no when we can help display collections and make exhibitions more attractive. When the palace was rebuilt our specialists took part in the architectural and archeological research and thanks to this the architectural part of the project was completed in a manner above all reproach. The interiors have needed further work, to put it mildly. To a certain extent political will from above played a role. First there was the idea that all the museums would help the Konstantinovsky Palace assemble exhibitions, however this somehow did not succeed. And then the proposal was made directly to the Hermitage to use all the exhibition areas free of charge. We are arranging the museum part in accordance with the main idea of the Konstantinovsky Palace, which is the idea of Russian statehood. That is why we have put there exhibitions of heraldry and state awards which, by the way, lose out in the main Hermitage buildings. We can also place some military paintings in the Palace of Congresses.

- The building of new storage facilities for the Hermitage has long been linked with serious plans for the museum’s development. Why then was it built in such a remote district, near the Komendantsky Air Field?
- The construction is not yet completed. In addition to the six-story building that has been erected there are two more to come, and they are quite technological, I might add. When were getting a parcel of land to build on, it was assumed there would be a lot of construction going on nearby. But then it turned out that we were in an empty space and we even had to bring in water especially. However, we have tried to turn these complications to our advantage. The district is a bedroom community which has a great need for cultural life. Therefore we changed the concept and made the storage facility open to the public. There is no asphalt put down yet, but we are selling admission tickets and people come to see the holdings in our storerooms. We are planning to organize clubs for schoolchildren, lecture rooms, and various educational programs on the basis of the storage facility. In general, a fine piece of the Hermitage is now settled into what is a residential area.

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