No end in sight to free newspaper revolution
FLYING INTO London at the end of February, I picked up a Metro lying in the train from the airport. At the hotel I grabbed The Guardian and noticed that like Metro, it had climate change on the cover.
Next day, back on the train to London City Airport, I compared thelondonpaper with the Evening Standard. Both had the "ex-lover kills mum and baby" story on page one.
When I visited London in October, both Metro and The Independent had the same cover: a page-filling picture of an orange/yellow sun, illustrating global warming.
It is not the difference between free and paid for papers that is striking, it is the similarity. Paid for papers are not eaten by aliens, they face competition by their own blood brothers, made by the same journalists and published by the same publishers.
The success of free newspapers is also the success of newspapers in general: offering a good advertising platform to businesses.
Most TV viewers are irritated by commercial breaks and product placements in programmes; radio advertising is heard but hardly listened to; and pop-ups, pop-overs and pop-unders are a source of frustration for internet users.
But print ads are valued by readers and offer opportunities that TV and radio don't: detailed information for a mass audience.
And free papers do something slightly different too: they target a younger audience, the audience that more-andmore sees information as something that is, or should be free, and an audience that does not read paid for newspapers on a regular basis.
The ‘young' audience, however, should not be exaggerated.
Although the readership of free papers is definitely younger, it is not overwhelmingly young. Almost every free newspaper targets the 18-35 ABC1 urbanite, but usually less than half of the audience is within that group.
Many readers are older (disclosure: I am over 50 and never been denied a free paper). Readership is a result of distribution: if you distribute on the Tube you get working people, if you distribute them in first class airport lounges you get wealthy travellers, and if you distribute them in hospitals you get the old and sick (which explains why this is not very often done).
Although free and paid papers show many similarities, the question remains whether they are really competing: is the decline in paid circulation caused by free papers? UK data is not very convincing.
The Sun lost considerably in the past 10 years, but the decline had already started way before the introduction of free dailies. The Daily Mail seems unaffected.
The Mirror has been losing sales for the past 10 years but the decline started before 1999, the launch date of Metro — the same goes for the Daily Express and the Daily Star. The latter even increased circulation after the Metro launch.
Some papers might see the decline accelerate in the 21st century, but the general picture is not that of a landslide after the launch of free papers.
International data supports these findings: only in Iceland where two free dailies are distributed door-to-door to almost every Reykjavik household is there a clear substitution effect. In all other countries, the decline set in before the introduction of free dailies.
Another question is whether free papers are really a success story. With News International, Associated, Trinity Mirror and the Guardian Media Group moving in, one should expect that there is money to be made in this area.
But is there?
The UK publishers are not alone, it is a worldwide trend. Half the circulation of free dailies is coming from publishers of paid for newspapers: Orkla and JP/Politiken in Denmark, Bonnier and Schibsted in Sweden, Sanoma in Finland, De Telegraaf in the Netherlands, RCS and Caltagirone in Italy, Le Monde and Sud-Ouest in France, Ringier and Tamedia in Switzerland, Recoletos and Planeta in Spain.
Also in the US (Belo, Tribune, NYT), Australia (News Ltd), and Hong Kong (Sing Tao) incumbent publishers are active in free dailies.
This month total circulation of free papers will reach 36 million in 44 countries; there are almost 200 different titles with twice as many editions. Circulation, however, has doubled in the past two years: at the end of 2004 it was almost 18 million.
The same goes for titles and editions, meaning that half of the papers have been around for less than three years.
As no publisher expects a profit within three years, the majority of the papers are still losing money, and even not all papers that were launched more than three years ago are making a profit.
Metro International, the market leader in free dailies (total circulation more than eight million) made its first profit after 12 years in 2006.
As the economy in most countries keeps growing, as TV and internet advertising is fragmented and not suitable for all products, as newspapers — all newspapers — keep offering very good advertising opportunities, and as the number of non-readers of paid newspapers keeps growing, free newspapers have a bright future ahead.
But competition between free titles is rising. There are already many markets with three or more free dailies (London, France, the Netherlands, Sweden, Denmark, Italy, Spain, Greece, Portugal, Czech Republic) which forces free dailies to rethink their business model.
The first move is diversification of distribution: move to the afternoon, out of public transport and eventually to door-to-door (Denmark, the US, the Richard Addis plans for London).
The second move is competition on content, which is visible now in Denmark, the Netherlands, France and the London afternoon market.
The third trend is going to niche markets with free dailies or weeklies on sports, business, and ethnic minorities.
The market share of free papers in Europe was 22 per cent in 2006, coming up from 10 per cent in 2003, and with the end not in sight yet.
Piet Bakker is associate professor, University of Amsterdam