AA I sit in the Aquavit Bar of Stockholm’s Clarion Hotel – sipping an Apple Dream “infusion” and listening to a lounge band belt out Simon & Garfunkel tunes – I can’t help but reflect on the last two weeks of travel in Europe.

There isn’t as much panic in Western Europe as the United States, but there’s plenty of stress. It’s not the depth of the recession that worries European publishers. It’s the length. If the light at the end of the tunnel doesn’t appear by the first quarter of 2010, this becomes more of a cash conservation game for newspapers. Whether or not you are exposed because of debt, it’s a degree of pain most have never felt.

Like elsewhere in the world, there’s plenty of tension about making the internet pay off – now. There’s a lot of impatience for a business model that doesn’t exist. The model still is 90% print newspapers, but virtually all of the questions from question-and-answer sessions were about digital.

What is trickier in the urban markets I visited (Brussels, Amsterdam, London, Helsinki, and Stockholm) is the competitive landscape. These are publishers accustomed to lower margins than, say, the United States, Canada, Australia, and the regional press of the United Kingdom. They’re under pressure to maintain historic margins, but they’re comfortable in the single digits and lower double-digits.

And, honestly, publishers in these markets probably would be willing to lose money in the short-term if it meant taking advantage of market disruption and grabbing market share to tout to advertisers post-recession. Don’t think that’s not under consideration.

Here’s an interesting game I plan to play soon. The comfort level for a U.S. publisher operating a local monopoly is probably a profit margin of no less than 20% – preferably higher. But what if you aggregated profit margins of all players in competitive markets in European capitals? In Stockholm, we calculated that to be about 25% among the Top 4 players. Totally unscientific, but something I’ve never considered. What if we did the same exercise in other world capitals?

I suspect we would find the American proclivity for high profit margins may be close to the natural level of profitability operating daily newspapers in an urban market. The Americans are the only game in town. Most in Europe are simply in a competitive situation.

What we should all keep our eye on is if that natural level for a print-centric newsmedia company is contracting, that’s lower margins for U.S. newspapers – and, potentially, the erosion of marginal players in European capitals.

Time to plug out from this trip. With “Hound Dog” now the song of choice for my lounge band, it’s safe to say that Elvis has left the building.