Launching freesheets difficult in Germany
By Leah McBride Mensching, Friday 1 August 2008 at 22:01 :: Competition :: #2033 :: rss
Paid circulation in Germany has dropped from 25 million to 20 million between 1998 and 2008, making the country highly attractive to free newspapers, Newspaper Innovation reported Friday.
However, even though Germany seems to be a blank slate in regard to freesheets, plans by Metro, Schibsted and Dagsbrun have not worked, as German publisher Springer “is said to have a 'war fund' of €300 million ready and could launch competitor Gratissimo ‘within days’ while WAZ – the second German publisher – also wants to fight a free daily at any cost,” Newspaper Innovation stated.
In addition, publishers have also joined forces to sell ads below cost to prevent free dailies from entering the market, while sources have said it would cost at least €400 million for a free daily operation, and would take at least six years to break even. Compared to €10 million and €20 million launch costs in Spain, France, the United Kingdom and the Netherlands, how the €400 million figure “is calculated and who the sources are is mysterious. It looks like an attempt to raise the entry barrier,” according to Newspaper Innovation.
“Most of these actions actually prevent competition and could be brought forward to the Bundeskartellambt, the German anti-competition agency. So far legal actions have been directed towards free dailies, but it could be the other way around as well,” Newspaper Innovation reported.
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