Springer CEO says "free beer" era for internet ending

BERLIN Thu Oct 18, 2012 11:19am EDT

BERLIN (Reuters) - Germany's largest newspaper publisher will introduce a paywall for its flagship national daily Die Welt by the end of this year and is confident competitors will follow suit, Axel Springer Chief Executive Mathias Doepfner said.

In an interview with Reuters, Doepfner said he believes the ruinous "free beer for everyone" era of giving content away on the internet may be ending, as paying users are not only proving more valuable for publishers, but crucially for advertisers too.

"It's a risk and there's no guarantee that it'll work out, but I'm more optimistic than I was a year or two ago," Doepfner said of the foray into subscription-based offerings where online users will have to pay for news they have been getting for free.

"We'll be alone for a while, but I've been positively surprised by how many comments I've been hearing from other publishers saying they're getting ready for it too," said Doepfner, 49, in his spartan office atop the 20-storey Springer building that towers over the heart of Berlin.

Several papers abroad including the Financial Times, Wall Street Journal and Britain's Times already charge for online editions, mostly on a so-called "freemium model" with some articles free and a premium kicking in at a certain point.

On Thursday, U.S. magazine Newsweek said it would go fully digital early next year while the New York Times halved the number of monthly free articles on its website to 10 from 20 earlier this year.

Doepfner, a former Die Welt editor who stands two meters tall, said other Springer dailies would follow even though German newspapers have not been hit as hard as in other countries by plunging circulation and revenue.

Springer, which owns continental Europe's top-selling Bild daily with 12.3 million readers and 2.7 million copies sold each day, wants to raise its share of earnings from digital media to 50 percent by 2020 from 38 percent now, while maintaining a robust print media business.

END OF GOLDEN ERA?

Doepfner said publishers' fears of introducing paywalls were fading in part because subscribers were proving more valuable to advertisers than non-paying readers. The tacit message is paying users often have more disposal income too.

"I believe 100,000 paying users are worth more than 1 million non-paying users. A paying reader has consciously picked this brand, they want this content and they have a different connection. They're open to ads with a different intensity."

He said Springer's market research has shown more users believe that quality journalism has a value worth paying for.

"I don't think it's a lack of willingness for people to pay for content," said Doepfner. "I think it's a lack of readiness to take part in complicated procedures to pay."

Springer, founded in 1946 by journalist Axel Springer, has pushed enthusiastically into digital publishing even though its newspapers are still doing comparatively well in a country where many people still prefer to get their news in printed dailies.

Germany has hundreds of thriving regional newspapers.

"Germany is still definitely more a newspaper nation than other countries," he said. "It has more to do with the regional structure of newspapers, they're anchored more into the regions.

Based in Berlin, Springer is majority owned by the Axel Springer Society. It is active in 35 countries with some 240 newspapers and magazines and more than 140 online activities. Doepfner said the chances of expanding in the print sector were negligible. But it would ardently defend its print offerings.

"The golden era for the newspaper business is over, but the silver era could also end up being quite good," he said.

"Our view is that we're not defending print journalism. But rather we're defending newspaper-style journalism. That will survive, I'm convinced about that. I believe newspapers will live a lot longer than many people believe."

The story was corrected in the eighth paragraph to fix number of readers to 12.3 million from 2.7 million. It has also corrected the fact that Bild sells 2.7 million copies dai daily.)+

(Additional reporting by Nadine Schimrosik and Alexander Ratz; Editing by Mark Potter)

(erik.kirschbaum@thomsonreuters.com)

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