How is one news source, totally funded by subscriptions, to compete with another that receives government subsidies? Such is dilemma that arose when WAZ, Germany's second-largest newspaper group, dropped its subscription to the independently-run German press agency DPA in favor of government-subsidized Agence France-Presse.
As Isabelle de Pommereau points out in the Christian Science Monitor, the decision has consequences for both WAZ and DPA. Since the WAZ group started relying on AFP for all its wire coverage, "the papers' depth of German-based coverage has become undeniably more shallow." Pommereau adds that the loss of such a major client also puts financial pressure on DPA as it struggles against cutting coverage or raising the cost for its other clients.
Both WAZ and DPA served up credible arguments for their respective predicaments, Pommereau explained. On the one hand, by giving DPA the boot WAZ was able to cut costs by $2.7 million and save 25 journalists' jobs.
On the other hand, DPA claims AFP's government funding allows the French service to offer artificially low charges that price out the competition. AFP receives 108 million euros ($150 million) from the French government, which amounts to 40 percent of its revenue. "If Berlin gave us 108 million euros, we could give our services for free," DPA's chief Michael Segbers told a German television magazine.
However, AFP is not completely immune to newspapers' ongoing cost-cutting measures. The French regional La Provence recently abandoned the French news wire, and it is possible other regional papers will follow.
The French press receives the most government aid in Europe, which only increased with the 600 million euro aid package to newspapers announced by Sarkozy in January. Yet, the French are not alone on this issue. The European Commission recently chided Sweden for doling out too much aid to big city newspapers, and Spain is rumored to be contemplating its own Sarkozy-style bailout.
In the US, newspapers do not receive direct subsidies but profit from indirect aid in the form of tax breaks and discounted postal delivery rates.
The debate over government subsidies has long centered on whether or not such funding affects journalistic integrity within the beneficiary organization. The DAP-AFP scenario raises questions of the indirect consequences for outside news organizations. Obviously, if newspapers and by extension their readers are forced to rely on fewer sources for news the quality of information is going to suffer. Conversely, if WAZ's only other option was to cut staff, that wouldn't be a good thing either. It's a fine line newspapers must tread in order to continue producing the same quality of journalism.