MEDIA SYSTEM & PUBLIC BROADCASTING
Germany is the 4th biggest economy in the world with a per Capita GDP more than 45.000 USD per year.
With such a high purchasing power in mind, it seems only natural that most of the privately owned media is financed through ad-sales. Television and daily newspapers generate the most income in advertising media.
This has different implications: privately owned TV-channels rely almost exclusively on ad-sales, therefore above all depend on good ratings.
This causes constant discussions about quality and ethics of private TV-programming.
Newspapers generate on average 40% through ad-sales and around 60% through subscription and copy sales.
The dependency on ad-sales is less than compared to private broadcasting, but since the press’ normative claim of spreading political information to the public, this relationship can still be problematic.
As revenues increase with a higher circulation, but production costs remain nearly the same, the ad-financed system favors press-concentration and monopolization.
Another relating problem is the possible influence of ad-clients on newspaper content.
Through increasing financial pressure, many journalists are tempted to blur the borders between advertisements and articles or sometimes articles are only published because they synergize with an ad in order to please the client.
S: Public Service Broadcasting
To avoid this problem for public broadcasters, they are financed by a fee every German household has to pay.
From approx. 18€ per household per month, all the different public service broadcasters like ARD, Deutschlandradio or arte are financed.
The KEF, a commission whose members are appointed from the prime ministers of each federal state calculate this fee, which is constantly disputed and subject to court proceedings.
S: Detailed Distribution of the Broadcasting Fee
However, up to now, the fee which makes up most of the budget of the 9.1 billion Euro (and is the highest budget of a non-commercial media company world-wide) the public service broadcaster has been secured.
Public service broadcasters are only allowed to include advertisement or product placement for certain events like football games or during specific time frames of the day.
S: Circulation of Daily Newspapers 1991-2014 in Million Copies
Circulations of the traditional print-products are decreasing and so do the ad-revenues.
For this reason many think that the future lies in different financing models.
Today, there is another big question to be answered: How to finance Online-Media?
S: Ad Revenues in different Media
Online offers of Germany’s newspapers have been traditionally free of charge for users, but the ad-sales do not generate nearly as much as their print-counterparts.
The reason for this is that online-ads are much cheaper, but the editorial effort remains the same.
Through the creation of online news-portals, many publishers created competitors for their own traditional press-titles.
Interview with Prof. Dr. Klaus Beck (Professor for Media Economics at Freie Universität Berlin):
Q: Online-Journalism is getting more and more popular. Why is it so difficult financing it?
First thing to say is: Maybe there are successful because they are free.
So people are not willing to pay for them.
That’s a great problem for professional journalism financing.
And the appropriate way to finance quality journalism for a long time was advertising.
But advertising isn’t working very well in the online sphere because advertising is very, very cheap and the reason for that is that everybody knows that advertising has only limited effects.
That’s true for television and broadcasting media and print papers as well.
But now we have the opportunity to measure that.
We know exactly that it’s not working very well.
That’s why the prices are so low. And that’s the problem to get enough advertising money for that.
Q: What about different financing models like crowdfunding?
I think the crowdfunding platforms have to face one problem, because they very much depend on the success of a specific news or article or contribution.
And so if they would like to get more money, they have to select the pieces which are selling very well.
And for the journalistic side, it’s a problem because it means a kind of marketing effect.
So I have to write in a way, in a manner, that is good for selling this article and maybe it’s still independent but that’s not so clear.
So you very much depend on the concrete payment.
Q: Especially Axel Springer is pushing forward a paid-content-model. Will it be successful?
Because I think even though advertising is not the real way to finance quality journalism, all the users have to learn that they have to pay for journalistic content as they did some years, some hundred years before since the foundation of the printed press.
And paid content probably would be the model of success for the future.