For U.S. Newspaper Industry, an Example in Germany?

by Eric Pfanner

In 2013, print news readership continues to climb in places like India and China. And many “modernized” European countries also seem to support papers better than the United States does. Why? One possible reason is that the Internet developed faster in the United States and, therefore, was adopted earlier by new generations. To explore this discrepancy further, this New York Times article offers insights into Germany’s ongoing cultural and economic embrace of newspapers.

While daily newspaper circulation in the United States fell 27 percent from 1998 through 2008, it slipped 19 percent in Germany. While fewer than half of Americans read newspapers, more than 70 percent of Germans do. While newspapers’ revenues have plunged in the United States, they have held steady in Germany since 2004.

American publishers blame the economic crisis and the Internet for their plight, but [a new] report says the structure of the U.S. newspaper industry is a big part of the problem. Most German newspapers are owned by [families] or other small companies with local roots, but the American industry is dominated by publicly traded chains. Under pressure from shareholders clamoring for short-term results, the study contends, U.S. newspapers made reckless cuts in editorial and production quality, hastening the flight of readers and advertisers to the Web.

Instead of focusing on journalism, … U.S. newspapers made unwise investments in new media and compounded the damage by giving away their contents free on the Internet.

German publishers have been much more reticent about the Web, in some cases keeping large amounts of their content offline. …

[However,] it is equally possible that German newspapers have yet to bear the brunt of the challenges confronting American papers.

Germans have been slower than Americans to embrace the Internet for some other purposes, not just news. E-commerce in Germany, for example, was slow to take off because of concerns about data security and a suspicion about the use of credit cards. While German publishers have recently stepped up their efforts to develop new digital business lines, in this regard they trail American newspapers. As the study notes, the Internet generates only low-single-digit percentages of most German newspapers’ sales, while online revenue has reached double figures at some U.S. papers.

German papers do have one big advantage in dealing with the digital challenge: they are well organized at an industry level.

Publishers have lobbied the government of Chancellor Angela Merkel to draft legislation that would create a new kind of copyright for online content; German publishers say this could serve as a lever to extract revenue from search engines and news aggregators. And they have complained to the German antitrust authorities about the dominance of the biggest search engine, Google.

Whether these moves will help publishers build for the future, or simply protect their existing businesses, is not clear.

For now, however, German publishers profess confidence in a continuation of the status quo, a luxury that newspapers in the United States and other countries, for whatever reasons, cannot afford.

In thinking about differences between Germany and the United States, can you suggest other reasons that account for the U.S. newspaper struggles? Do you think the points made in this article will continue to keep Germany more newspaper-friendly over time? Would similar measures make a difference in the United States, or is the move to the Internet and the disappearance of newspapers inevitable?

Source: Eric Pfanner, “For U.S. Newspaper Industry, an Example in Germany?,” New York Times, May 16, 2010, http://www.nytimes.com/2010/05/17/business/media/17iht-cache17.html?_r=3&ref=media.