Global E-Commerce: Europe - E-commerce Efforts In Germany

E-COMMERCE EFFORTS IN GERMANY

According to an April 2001 article in Campaign, "Germany is one of the biggest Internet markets in Europe. With 11.99 million home Internet visitors in January 2001 and a total online ad spend of 204 million euros last year (source: Jupiter MMXI), it vies with the UK as the region's largest online economy. Currently, the UK has 12.84 million home users and a market value of about 224 million euros. Between them, these two territories account for 45 percent of Europe's 943 million euro online ad market." The country's leading ISP is T-Online, a subsidiary of Deutsche Telekom, which also happens to be the largest ISP in Europe, with operations in Austria, France, Portugal, Spain, and Switzerland. T-Online boasted 6.53 million German subscribers and 7.94 million total subscribers at the end of 2000. Although sales that year grew 86 percent to 797.2 million euros, the firm posted a loss of 125 million euros. A flat-rate unlimited use package, which T-Online first implemented that year, had contributed the loss, a fact which prompted the firm to eliminate flat-rate pricing in 2001.

Germany's leading e-commerce player is Bertelsmann AG. Although Bertelsmann dabbled in various online ventures in the mid-1990s, it wasn't until a few years later that the publishing powerhouse devised a concrete e-commerce plan. In 1998, the firm acquired a 50 percent stake in BarnesandNobel.com for roughly $200 million to strengthen its position in the U.S. online book industry. More importantly, Bertelsmann also launched its own retail book site, BOL.com, to compete with Amazon.com in Europe. By 2000, Bertelsmann had funneled more than $13 billion into its Internet operations. In May of that year, the firm played a role in the creation of Terra Lycos, formed when Spain's Terra Networks paid $12.5 billion for Lycos, one of the largest U.S.-based World Wide Web gateways. Bertelsmann agreed to spend roughly $1 billion on advertising and other Internet services from Terra Lycos over the next five years in exchange for access to the 50 million customers already using either Terra Networks or Lycos. The next month, Bertelsmann merged its increasingly diverse e-commerce operations into a single entity known as Bertelsmann eCommerce Group. Adding to its growing e-commerce holdings, Bertelsmann also bought online music retailer CDNOW. In a move that demonstrated its determination to emerge as a worldwide leader in e-commerce, the firm joined forces with music indexing site Napster in October of 2000, despite widespread controversy over alleged copyright infringement regarding the technology that allows Napster users to exchange songs for free.