The Solidarity Curse Hard Times for a German News Wire

The German Press Agency, or DPA, serves as a backbone of sorts for the print media. But more and more publishers wonder whether they can afford its services. With the classic cooperative media system threatening to disintegrate, the core business of the country's biggest wire service has suffered.


There are two ways to look at the DPA news agency. One is as a massive information machine, with a control room where about 450 editors and writers produce hundreds of up-to-the-minute reports around the clock, 365 days a year, shaping world news material into a usable form and distributing the product to daily newspapers, television stations and magazines. This roughly reflects the experience of DPA's chief editor, Wilm Herlyn.

The DPA newsroom in Hamburg.

The DPA newsroom in Hamburg.

But the machine can also be seen as a costly water boiler for relatively insignificant banalities, the reporting of which sometimes looks out of step with reality. This is the view now taken by some of Herlyn's customers.

Last Tuesday afternoon, the DPA's state news service in the eastern state of Mecklenburg-Western Pomerania reported, at 1:50 p.m., that "Transportation Minister Volker Schlotmann (SPD) unveiled the first poster for the 'Safe Country Roads' campaign on the B 106 near Schwerin." At 2:02 p.m., DPA distributed the following report to clients nationwide: "The Czech Republic and Switzerland will be the focus of the 18th Week of Dance in Dresden from April 22 to 29, 2009."

These examples illustrate the double-edged problem faced by Germany's top news agency. It is big enough for even the smallest piece of news, but size costs money -- which is now in short supply for many customers. As a result, DPA has recently started losing business.

The Hessische/Niedersächsische Allgemeine, one of newspaper publisher Dirk Ippen's regional newspapers, has considered dispensing with the news giant's services. The powerful Essen-based WAZ publishing group terminated a DPA subscription for its four papers in the state of North Rhine-Westphalia at the start of this year. And executives at many other publishing houses are debating whether they can -- or even wish to -- afford the agency's service.

DPA's core business was already in the red in 2007. Financial figures for 2008 have not been released yet. However, the company does turn a profit with its business of broadcasting PR material on its News Aktuell channel.

Another growing problem for the agency is the theft of complete reports on the Internet. Once a piece of information lands on the Internet, it can spread immediately. A number of audacious entrepreneurs take the classic news agencies' content, distribute it under their own names and earn money with advertising they then tag on. The major global agencies, like the US-based Associated Press and France's Agence France-Presse, are only starting to fight the practice.

In light of these problems and internal structural difficulties, DPA, founded in 1949, is now in critical condition. In its heyday it counted almost all newspapers among its customers. Similar to a cooperative, DPA is owned by the newspapers, magazines and broadcast stations that use its services.

Wilm Herlyn, head of DPA

Wilm Herlyn, head of DPA

But the blessings of the solidarity model are also DPA's curse. Its customers are its owners, so terminating agreements with them would be inappropriate. As long as the newspaper industry was highly profitable, such action was unnecessary. Both sides therefore show little interest in change. The model also has a calming allure: None of the partners can own more than 1.5 percent of the common stock, and broadcast organizations as a class are limited to a 25-percent ownership stake. Payment is based on circulation or range of transmission, as well as the scope and term of each individual agreement. A regional newspaper with a circulation of roughly 200,000 copies pays about €500,000 ($660,000) a year for a full DPA subscription, or €2.50 ($3.30) per reader. Many editors are now complaining that the service is too expensive.

'An Avalanche'

The DPA business model, successful for decades, is faltering. "If Dirk Ippen bails out, it could trigger an avalanche," says Konstantin Neven DuMont. The up-and-coming Cologne publisher, whose empire includes newspapers like the Kölner Stadt-Anzeiger and Frankfurter Rundschau and, more recently, the Berliner Zeitung, is a member of the DPA supervisory board.

DuMont's papers have also considered foregoing the agency's services, but only in theory. "One cannot ignore the question of the cost-benefit ratio," he says, "but it would be a shame if there were no longer a full-service German news agency. I propose that we jointly investigate ways to reconcile costs and benefits."

For now, DPA can hardly expect more support. Daily newspapers are wrapped in their own crises. WAZ editor-in-chief Ulrich Reitz justifies his decision to cancel his subscription by characterizing it as a choice between terminating many of his own journalists or saving the €3 million ($4 million) the DPA subscription was costing him. Now he intends to demonstrate how to improve the news business without DPA.

By the numbers

By the numbers

"We haven't had a single complaint from readers. Our stories are more independent than before," says WAZ Managing Director Bodo Hombach. But DPA Editor Herlyn argues that the WAZ has missed out on stories. Managers at the agency are also concerned that the WAZ will secretly use its stories via the Internet. A program called Attributor is now being used to search the WAZ's content to find stories plagiarized from DPA's enormous information empire -- which may very well have become simply too big.

The mountain of news that DPA accumulates is enormous. The basic service includes 800 reports a day; that number has increased fivefold in the last 20 years. Then there are the agency's twelve state services, each of which issues 100 reports a day, plus 700 photos. This flood of information pours steadily into the country's news and editorial offices, seeps into the Internet and washes onto the daily newspapers' websites. In the end, stories that originated with DPA are no longer attributed to the agency -- another growing problem.

Editors of daily newspapers could once expect their readers to be reading agency reports at the breakfast table for the first time. Today readers are familiar with some stories after having read them on the Internet -- through news portals or on the newspapers' Web sites -- the day before.

And what is the printed paper left with? "As a newspaper, we often pay for something that's found its way to the Internet the day before," says publisher Neven DuMont.

A Tarnished Image

Managers at the white villa that houses DPA's headquarters in Hamburg's exclusive Pöseldorf neighborhood are familiar with the problem. They're searching for solutions. "I could easily imagine developing a separate office that prepares content just for the editorial offices of online publications," says Herlyn.

This may be easier said than done -- even after current SPIEGEL ONLINE Editor-in-Chief Wolfgang Büchner replaces Herlyn beginning in July. Büchner is unwilling to discuss his own ideas yet. Besides, even minor reforms within the DPA realm must be approved by the partners, an experience Herlyn has found challenging. "The partners like to keep their DPA on a short leash," he says.

Herlyn would have preferred to enter the business of dealing directly with consumers, perhaps though an agreement with search engine Google News. But the agency has largely missed out on the multimedia age, in part because its owners showed so little interest in new media for so long, viewing them as a threat more than a potential boon.

Now it's not surprising that DPA has a reputation similar to that of public radio stations in Germany, whose efforts to provide a basic service lie somewhere between the ponderous and the sullen.

The image is devastating for a major news agency. Competing agencies, often derided by the powerful DPA in the past, now hope to benefit from DPA's current problems. "The newspapers are reacting to cost pressures, to which the agency budget was always immune in the past. Those days are gone," says Matthias Schulze, managing director of DDP, another German wire.

The DDP is a privately-held firm that over the last few years has moved from insolvency to profitability. Today, says Schulze, the agency shows "it is possible to operate a profitable agency business of our size with 145 employees." But Schulze knows perfectly well that the comparison isn't fair. As Germany's second-largest news wire, the DDP can pick and choose what it wants to offer its clients, since DPA has always provided the dry and expensive standard fare.

Herlyn, at DPA, calls this approach "cherrypicking." Schulze admits that "based on news volume, our state services provide 50 to 60 percent of what DPA offers." But DPA nevertheless has to reckon with this smaller, more flexible competitor.

Wolfgang Wähner-Schmidt, former editor-in-chief of Reuters Europe, says DPA's owner-customers have to weigh in on a future model for the agency. "The partners must decide whether they want a system of subsidized basic supply, which is the case with the public radio stations, or a high-quality journalistic operation capable of moving in the market and proving itself," he says.

Reuters, of course, began as a London-based telegram business but now "moves in the market" as an international news wire. According to Wähner-Schmidt, Germany's largest news agency must make itself indispensable. "Faster, better, more thorough news -- nothing else will do."


Translated from the German by Christopher Sultan


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