Paper-Bound European Publishers Stick a Toe Into the Internet

German publishing giant enlists America Online to get wired

ONE would be tempted to call Bertelsmann AG a microcosm of the German publishing industry. But with total annual revenue pushing $15 billion worldwide, Bertelsmann is too big to be a micro-anything. And besides, this corporate giant, the largest publisher in the world, prefers to think of itself as a European-American media company.

Still, like countless other German publishers, Bertelsmann is firmly anchored in traditional publishing - books were its most profitable sector for the year ending in June - but it has also reached out into electronic publishing.

Its new joint venture with America Online, aimed at bringing a version of that popular on-line service to Germany, is currently being field-tested and should be officially launched by the end of November.

America Online, known as AOL, will be challenging CompuServe, now the leading on-line service in Europe. (AOL recently leapfrogged over CompuServe in the United States to become the nation's leading on-line service.)

More competition for the European market is on the way from Europe Online, a joint venture involving Matra Hachette of France, Burda of Germany, and Pearson of Britain. Europe Online, with a blue logo that evokes the gold-stars-on-blue logo of the European Union, is to be launched around the same time as AOL.

Will this be at least two more on-line services than the European market is ready to absorb?

Most Europeans are not yet very ''interactive'' in the use of their computers and tend to be ''passive'' in their TV viewing habits, noted Adam Daum of Inteco, a British market-research firm, during a recent seminar for publishers here. This suggests that Europeans are not likely prospects for such things as on-line services. ''Even renting a video is a minority activity in Europe,'' Mr. Daum said.

Much more bullish is Florian Langenscheidt, a scion of the famous encyclopedia and dictionary family and a spokesman for new media within the German publishing industry. German households already have 2.5 million computers with CD-ROM drives, and that number is likely to climb to 3 million this Christmas.

At a press conference at this year's Frankfurt Book Fair, he said it was inevitable that ''new media'' would become mass media and lead to ''new kinds of reading - following Thomas Mann's life along a time line, searching the [John F. Kennedy] archives electronically, doing things that haven't been possible before.''

The Bertelsmann-AOL and Europe Online ventures also raise issues of concentration and competition in the marketplace of ideas.

The European Union cartel office reviews projects like the new on-line services to try to ensure competition.

But Bertelsmann executives argue that such concern is misplaced. They hail the American regulatory approach to questions like cross-ownership within different segments of the media industry, which they see as allowing media firms to get big enough to compete on the world stage.

European and German authorities need to understand that ''big-ness and capital accumulation are not bad but necessary if companies are to compete in an international market,'' says Bertelsmann spokeswoman Ulrike Grunrock-Kern.

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