European media, like their American counterparts, have struggled to
adapt their business models in the online era. Axel Springer’s net profit
dropped by nearly half last year because of the economic crisis and
declining advertising revenue, but the company has rebounded and, in the
judgment of many analysts, is one of the media leaders in the move to a
digital world.

Here is the conversation recorded yesterday.

CHARLIE ROSE: Welcome.

MATHIAS DOPFNER: Pleased to be here.

CHARLIE ROSE: You and I talked over the weekend and you had just
bought an iPad. So what do you think? And what role might it play in
terms of changing, if any, the fortunes of media, print media?

MATHIAS DOPFNER: I spent a couple of days with a family in Miami and
on Saturday morning I went to the Apple store on Lincoln Road and played a
little bit with the iPad and then bought one with my son. And I think this
is really starting a new era.

And I think every publisher in the world should sit down once a day
and pray to thank Steve Jobs that he is saving the publishing industry with
that.

I think the iPad is really delivering what we were all waiting for.
It’s a device that enables you to visualize content in a very emotional
way. It is an easy-to-use device. The price is a mass market price.

It has — and this is very important — a model that is very easy to
use. And it’s a cool device. So it’s simply cool to read journalism on
this device. So I think that really will make a huge difference.

We were proud to present with the American start of the iPad also at
least one of our German newspapers. It’s "Die Welt," our broadsheet paper.
And we offer that after a couple of weeks of promotion. We will offer it
at a price that is only 10 percent below the price of the print product.

And I think the advantages of the product on an iPad are obvious.
You get the news earlier. You have the same visual attractiveness that you
have of a newspaper. So I would not see any reason why people — why a
traditional newspaper reader would not decide to do this.

And another advantage of the iPad is also it is the first lean back
medium. You know, if you were working on your computer or even on the
laptop, you lean forward like a typewriter. You lean forward. With the
iPad you sit in the airplane and you relax and you lean back, you sit on
your couch, you lean back.

That’s the situation of a traditional magazine or newspaper reader.
And so it really depends — if we produce the content that is attractive to
the people. If we do the right things on the digital distribution
channels, I don’t see any reason why that should limit our possibilities to
generate higher profits.

CHARLIE ROSE: My theory has always been that what they had to do is
create a tablet, as Steve Jobs set out to do, that would make the
experience as good or better than reading a magazine or — in terms of the
color, in terms of the presentation. And it even had to enhance the
experience to draw people to it.

Was that one of the things that you had to be convinced of?

MATHIAS DOPFNER: You know, I don’t share this whole cultural
pessimism about journalism on the web. I don’t see why journalism or the
business models of journalism should be threatened in the digital area. I
don’t see any reason.

On the contrary, journalism can be better. You have access to new
resources of information, you have all the users — you have the
intelligence of your users that you can integrate. So we should not see
user-generated content on the one side and on the other side professional
journalism. That is nothing that is working against each other. It’s
really a complementary enrichment of our products.

So I really think we should be a lot more optimistic about the
possibilities for journalism on the web.

CHARLIE ROSE: Then tell me why you thought the newspapers’ future
looked so badly. Warren Buffett said in 2006 "Newspaper readers are
heading into the cemetery while non-newspaper readers are just getting out
of college. It’s hard to make money buying a business that’s in permanent
decline."

MATHIAS DOPFNER: Well, I think whole media sector has been overrated
for a couple of years. At the moment it is underrated.

CHARLIE ROSE: Even though the stocks have been down.

MATHIAS DOPFNER: Yes, but —

CHARLIE ROSE: You know that.

MATHIAS DOPFNER: Charlie, let’s simply look, for example, at our
company. I mean, give me one minute for kind of show off presentation. I
need to do this because it puts everything a little bit into proportion.

For me, the year 2009 was by far the happiest year in my professional
career. This was the year that I love most. Why? Because in a very, very
tough environment, we had to deal with the financial crisis and we had to
deal with the structural changes, the fundamental changes of the media
industry.

We achieved a high two-digit EBTA margin. We achieved in the
traditional newspaper business an operational EBTA margin of more than 20
percent.

At the same time, we were able to grow our digital revenues of the
entire company to more than 20 percent. The three highest margins in the
company are generated with online activities. So online is already
contributing significantly to the profitability of the company. Online
revenues and profits are overcompensating the decline in the print
business.

We have gained market share in that environment almost five percent.
And we have even increased the number of our employees because we did so
many new digital things which leads to happy shareholders. By the way, we
outperformed all the relevant media indices. Happy shared holders, happy
employees — why should we be depressed?

CHARLIE ROSE: Do you see your experience in 2009 as different from
the American experience or other experiences around the world?

MATHIAS DOPFNER: I don’t know. You know, I know one other media
company that has an even higher revenue percentage deriving from online,
that is a Scandinavian company, much smaller. Apart from that, worldwide
there is no peer in that dimension of owner revenues.

Why is that so? Perhaps there’s one explanation or two explanations I
would like to give. One is that we have no different silos for online and
print people. We have a fully integrated approach, which leads to the fact
that all our 10,000 employees are totally motivated to transform their
content, their brand, their business model into the digital world. Either
they do this or they have no future.

CHARLIE ROSE: Could content be free? Would you say it absolutely
cannot be? There can be no free model?

MATHIAS DOPFNER: Well, I totally believe that step by step we will
transform into mixed models where large parts of the journalistic content
will be paid for.

CHARLIE ROSE: Right.

MATHIAS DOPFNER: And the mobile devices help because on the mobile
devices you have already the habit that people are paying for content.
They pay for a telephone call, they pay for an SMS, they pay for an app.

And step by step we will have parts of the content, particularly if
it’s very added value service-oriented content, if it’s special interest
content, or if it’s really exclusive content, then people are willing to
pay.

But the decisive question is — and this leads to the second focus of
our activities — do we really provide the right content?

CHARLIE ROSE: How is the quality of your content different than
someone else?

MATHIAS DOPFNER: Well, this is hard to say because we are not dealing
with mathematics here. It’s — in any case, the culture of our company is
very journalistic. It’s very content oriented.

CHARLIE ROSE: And so is "The New York Times."

MATHIAS DOPFNER: Right. And I will not give any American newspaper,
particularly not this world prestigious brand like "The New York Times" any
lessons on what they do wrong. I can just tell you what we are doing,

And we are trying to define what the reader really wants and we try to
be very open for example, to integrate user-generated content — not only
to our digital products, also to our print products.

Let’s take our biggest newspaper, it’s "Bild." It’s reaching everyday
12 million readers. It’s quite unique in the world because if you look to
America I think the biggest newspaper, "USA Today" and "Wall Street
Journal," they reach about approximately 3.5 million readers per day. The
biggest TV show "America’s Got Talent" I think is reaching 11.7 million,
something like that.

In Germany, there’s no TV show that reaches everyday as much readers
as "Bild." It’s a unique brand, a very strong marketplace.

So we said let’s use this rich figure in order to make our 12 million
readers potential reporters. So we asked them to send us stories,
particularly to send us video content, to send us photos. Until today,
more than 600,000 photos have been sent. We have printed 18,000.

CHARLIE ROSE: So am I going to want to read your publications here?
Or am I going to read in the print?

MATHIAS DOPFNER: You know what, I don’t mind. I see ourselves as
content producers, branded content producers, marketers of branded content.
And if more and more readers will prefer to read it on tablet devices, I
like it, because we save printing costs, we save distribution costs, we
save paper costs. So in a way it is boosting our business model.

CHARLIE ROSE: But isn’t it inevitable more and more readers are going
to want to read it electronically?

MATHIAS DOPFNER: Yes, and I love it.

CHARLIE ROSE: Rupert Murdoch.

MATHIAS DOPFNER: He’s doing great.

CHARLIE ROSE: He deserves enormous credit for standing up and saying
we cannot and will not provide free content at the "Wall Street Journal."

MATHIAS DOPFNER: He was the first in America, we were the first in
Europe. We are totally in the same camp on that front. We have slightly
different ways to get to that point, but in principle with regard to
strategy, we absolutely are on the same page.

CHARLIE ROSE: So the idea of free content essentially will no longer
be the dominant idea in terms of communicating magazines and newspapers.

MATHIAS DOPFNER: Let me slightly rephrase it. I would say the idea
that free, democratic information —

CHARLIE ROSE: Online.

MATHIAS DOPFNER: — is only achievable in the digital world if
everything is for free is for me, web communism is a totally absurd idea,
because that would mean a supermarket is only a democratic supermarket if
you can get your milk and your bread for free.

So I think parts of the content will be free because they are
commodities, parts of the exclusive content will be paid for and
advertising financed, and parts of it will be subscription models or paper
models only. And that will be a development of, let’s say, ten years.

CHARLIE ROSE: Tell me once again why you think this is so successful.

MATHIAS DOPFNER: It is so important because it is changing, first of
all, the whole mindset of people who are using it. It’s not a work-like
atmosphere. It’s an atmosphere, as I said, where people lean back, where
they — where they will be seduced by something that’s very attractive
visually, whether they will learn completely new things. I think that is
one thing.

The other thing is, again, the pay model that is already there.

CHARLIE ROSE: Right.

MATHIAS DOPFNER: The next aspect is it is extremely easy to use. I
mean, you — really, this is something that my grandmother can use and it’s
— 

CHARLIE ROSE: But some people on this program on Friday night, Walt
Mossberg of the "Wall Street Journal" and David Carr of "The New York
Times" both made the point that this is for consumption not creation.

MATHIAS DOPFNER: Yes, but that’s the problem of the creator, not the
problem of the consumer. And we should care about the consumer.

This is attractive for consumer. This is attractive for the reader.
This is attractive for a reader who does not want to work in the Internet
to find something out very specifically. This is something for somebody
who wants to consume news, who wants to consume entertainment, who wants to
be seduced, who wants to be informed, who wants to be entertained. That’s
the new thing about it.

And the consumer’s perspective is the perspective which matters for
us. Of course we are disappointed that Flash is not working on the iPad.

And, by the way, there are a lot of things that have to develop. If
I’m saying we have to pray and thank Steve Jobs that he established this
device and that he most likely saved the whole journalistic industry, at
the same time, we should sit down and start renegotiation with the Apple
people about, for example, the revenue share.

I mean, 30 percent for Apple, it’s too much. But the competition
among the devices will help. There is Microsoft device, there will be a
Google device, there will be the Amazon Kindle. That will help.

CHARLIE ROSE: This is the first of many tablets that are going to be
on the air.

MATHIAS DOPFNER: This is just a new generation of devices, and I
think this is going to start a new era. If we, the publishers, the content
producers, take it as an opportunity, there’s tremendous potential for us.
If we see it as a competitor for our papers and magazines, then we are
dead.

CHARLIE ROSE: And for those people who are being forced to be — who
are being laid off in the journalism world, you’re saying this also can
save their jobs?

MATHIAS DOPFNER: Well, of course. I mean, if you look to the United
States, I think every third journalist has been fired.

CHARLIE ROSE: Exactly.

MATHIAS DOPFNER: Fortunately, in Europe it is the a little less
radical, but it will come. I mean, that’s a general trend, a global trend,
and we cannot do anything against it apart from really focusing on how to
use new distribution channels, the mobile devices — and this is a mobile
device for me — how to use them in order to establish sustainable business
models.

And if that is the case it can lead to a situation as in our company
that we have increased the number of employees last year.

CHARLIE ROSE: Why is this a better device than your iPhone?

MATHIAS DOPFNER: Well, because the screen is bigger. I have a
totally different attractiveness of the layout of the design, or something.
By the way, the design is an underestimated success factor of Apple in
general. This design is simply a cool device. I like it.

CHARLIE ROSE: And you carry it wherever you go.

MATHIAS DOPFNER: And you can carry it where wherever you go. You can
have it with a couple of pieces of paper, as I had here. And it is small
and at the same time has the biggest screen possible to provide you with
elegant layouts. And if you just flip through the pages, it is a wonderful
experience.

CHARLIE ROSE: So what does this mean for Google?

MATHIAS DOPFNER: Well, it’s competition. It’s a challenge, it’s an
opportunity. Google plays an important role on this device, too, so I
don’t see any — I mean, they are working on parallel ideas. Let’s see how
far they get. That’s competition. It’s great.

CHARLIE ROSE: You think they did the right thing in China?

MATHIAS DOPFNER: Yes, absolutely.

CHARLIE ROSE: They had no choice.

MATHIAS DOPFNER: They had no choice and they did the right thing.

CHARLIE ROSE: Let me talk about the Middle East, of which you have a
long-standing interest. Where do we stand now in terms of the U.S.
relationship with Israel?

MATHIAS DOPFNER: You know, I mean, on the one hand what the Israeli
government has done with the settlements in the recent past was a big
mistake, diplomatic mistake, and stupidity.

I don’t see the danger that this is really changing the relationship
between the United States and Israel profoundly. I don’t know if it’s
right to say there’s a precondition for further peace talks about further
settlements. If you look back, then this is quite a new position. Anyhow,
I think Israel can still count on the United States.

For me honestly speaking the more decisive question is which role
plays Europe. And is it possible for the enemies of Israel, for the
enemies of democracies, of particularly Islamic fundamentalists — is it
possible for them to play with Europe against America?

And as long as this is possible, that is weakening our common values,
the common values of democracy and freedom and stability and security.

So I hope Europe is taking a very clear position despite these events,
and I’m happy that Germany is today, despite its history and partly perhaps
because of its history, but not only because of its history, probably in
Europe the strongest ally of Israel.

CHARLIE ROSE: Iran — what do you think of the implications, the
possibilities of sanctions that will be effective?

MATHIAS DOPFNER: I hope that sanctions will work. We have to try
everything with sanctions to put pressure on the system and to show where
the western world stands. So I’m absolutely for sanctions.

I don’t know whether that’s enough. And I think if you really want to
avoid military action, then you should never exclude the military option.
But it’s also something where Europe and America have sometimes mixed and
divided opinions.

So I really think that the Iranian threat is absolutely serious, and I
don’t see any reason why a dictator like Ahmadinejad would not do what he
is announcing to do.

CHARLIE ROSE: If it’s unacceptable and sanctions don’t work, what’s
the option?

MATHIAS DOPFNER: Never exclude an option, and also never
underestimate the very emotional and concrete threat that the people of
Israel feel.

And if you would be in the position of somebody who lives in Israel,
who escaped the holocaust, and who remembers what it means if a political
system wants to extinct Jewish people or the state of Israel, would you
really wait until the apocalypse is happening? Probably not.

And so I think we should also be prepared for surprises. And in such
a scenario, it is absolutely vital that Europe and America are acting
together.

CHARLIE ROSE: OK. That brings know the question. What’s the
relationship between the Obama administration and Europe today as you see
it?

MATHIAS DOPFNER: I think Obama is extremely popular in Europe and
particularly in Germany. We had polls, and I think almost 85 percent of
the Germans would have voted for Obama. So he’s very popular. He’s a
charismatic speaker. He has a style to address its people that is very
unfamiliar in Germany, but people like it.

And, of course, he’s now in a way showing the nice face of the United
States, which is technically speaking a huge advantage, because it makes it
a lot harder for Europe and for Germans —

CHARLIE ROSE: How would you define "nice face"? A face that’s
willing to listen to Europe, that takes Europe into consideration, believes
in multi-polarity.

MATHIAS DOPFNER: Exactly — that takes its partner serious, that has
the capability to listen, that is not in this role of a warlord.

I mean, we are talking about cliches here, but they are important, and
to a certain degree, too, we are talking about very emotional perceptions,
but they’re even more important.

And in this context, again, Obama is a very popular, a very liked face
of America, and that provides a tremendous opportunity if you want to
organize joint activities between Europe and America. If he asks for more
troops in Afghanistan it’s a lot harder to say know no than if his
predecessor would have asked.

CHARLIE ROSE: Is Europe and, do you think, the larger world looking
to the United States for leadership?

MATHIAS DOPFNER: Absolutely. I think the United States are the
leading force if it comes to the defense of freedom and democracy in the
world. And it is important that we see that not with a kind of jealous
sentiment. We really have to be grateful for that. We have to invite and
motivate the United States to play that role and to be the leading role of
freedom —

CHARLIE ROSE: And do you think that the United States needs to
rethink its own brand of capitalism?

MATHIAS DOPFNER: Yes. I think there are two dangers. On the one
hand, you could go back to normal too fast. You could say well, this was
an accident and we have nothing to change, and —

CHARLIE ROSE: Back to business as usual?

MATHIAS DOPFNER: Back to business as usual. And to a certain degree
one can see this here and there. That’s not the right lesson.

On the other hand, you could go into the other direction, you could go
too far by even strengthening the role of the state, of the government, and
by that step by step you could establish kind of central economies that
have nothing to do with free economies, and that’s not going to work
either.

So this is a fine balance of better regulation, not necessarily more
regulation.

CHARLIE ROSE: Why is the European economy lagging behind everybody
else?

MATHIAS DOPFNER: I think is a —

CHARLIE ROSE: Asia, the United States, Latin America in some cases.

MATHIAS DOPFNER: It’s an almost philosophical question and has a lot
to do with the mentality in Europe. Europe is for hundreds of years a very
successful, leading force in the world. And it’s a clear beneficiary of
globalization so far. And the question is, is it going to be the
beneficiary of globalization in the future? I doubt it.

And is a —

CHARLIE ROSE: Europe will not be a beneficiary of globalization in
the future?

MATHIAS DOPFNER: That’s not in question, because if the mentality of
a very successful entity leads to complacency, leads to lack of
competitiveness, then I think this can be very dangerous.

And I think that has to do with the fact that you’ve just described,
that Europe is not doing so successfully. Germany is still a driving
engine and a big beneficiary of the Euro and the globalization so far. But
are we ambitious enough? Are we change-oriented enough in order to
maintain that role of Germany and Europe particularly in competition with
countries like India.

Like non-democratic countries like China — the non-democratic version
of capitalism is a very interesting version because you don’t have to talk
too much, you don’t have to discuss, you just do. You’re very efficient,
very fast.

If Norman Foster is telling about the — telling stories about the
project of the Beijing Airport that has been done in a couple of years
while in London people are still debating about the first architectural
competition of a new airport, that has also to do with the fact that in
China nobody has asked whether he wants to remove his house and how it
should be done. It’s simply dictated.

And so the competition with these forces is a tough one.

CHARLIE ROSE: So who dominates in the future? What’s the world going
to look like in 2050?

MATHIAS DOPFNER: Oh, that’s an easy one. I don’t know.

(LAUGHTER)

I mean, I’m — I’m an optimist and I think — for me the crucial
question is where will the free western world stand in 20 or 50 years? We
will be still the most powerful model and will democracy and freedom be
more widespread than today?

Take into account more than a third of the world’s population is
living under conditions that have nothing to do with freedom, under
totalitarian systems.

CHARLIE ROSE: My impression there’s more democracy today than there
was 20 years ago.

MATHIAS DOPFNER: There is the Freedom House report, and since decades
they are analyzing the state of freedom in the world in 94 countries, and
for four years in a row now freedom is going down.

CHARLIE ROSE: Now for four years.

MATHIAS DOPFNER: Of course, we are now much better than we were 20
years ago, but nevertheless we are not going in the right direction. And I
think really that has to do with the whole threat of fundamentalism,
terrorism, Islamic fundamentalism.

And the question is how is the west dealing with it? Are we dealing
out of a position of pride and self-confidence? Are we really defending
our values with all the necessary instruments that it takes? Or are we in
a kind of fear, almost decadent state of mind that we say, well, we are
better anyway and we don’t have to use strong methods to fight that?

And then I’m really worried that this kind of cultural revolution,
which it is in the end, can lead to terrible consequences in the world.

CHARLIE ROSE: Thank you for coming. It was a pleasure to see you.