The Rise of the Frees Free Publications Are Not New
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FEATURE The rise of the frees Free publications are not new. Door-to-door papers have been around for ages, as have postal B2B free magazines. Even the distribution model is not new; free mags have long been stuffed into the hands of commuters or left in pick-up bins. What is new is that they are competing directly and successfully with mainstream established paid-for titles. Ray Snoddy talks to some of the leading lights in the sector. er Mikael Jensen, chief executive that the winner will be the written word. of Metro International, the leading Ppublisher of free newspapers, had one Cover price increase? very clear prediction to make at the beginning The forecast on paid-for newspapers is not of this year about the future of the industry. a view shared by Steve Auckland, managing “I have no doubts about the free publishing director of free newspapers at Associated. model whatsoever and I am quite sure that Naturally he believes that the frees will continue some of the paid-for newspapers today will to grow in targeted areas “where you have the be free of charge to the customer in fi ve years’ right footfall at the right time.” time,” Jensen forecasts. But he does not believe that paid- “The Standard (in London) could be one for newspapers are about to join the of them and you could even look at some of free revolution any time soon - and the old broadsheet newspapers going free,” the that includes the Evening Standard. Metro executive adds. “I think the economics (of going The company, which launched its first free) are very, very diffi cult to stack free title in Stockholm twelve years ago, has up at this stage,” says Auckland, who been deeply involved in two important trends believes increasingly there will be a affecting the future of the newspaper industry twin track approach in future. since then. Instead of joining the frees, the The fi rst has been educating young people paid-for titles will move up market in 23 countries to read newspapers. and differentiate themselves by The second – less comfortable for becoming more specialist. In the Associated’s Steve Auckland: “I think the economics (of going free) established titles - has been to get the market end, cover prices will actually have are very, very diffi cult to stack up at this stage.” used to the idea that newspapers are for free. to go up to pay for such specialist The battle between the frees and paid-fors products – rather as the Standard put up its “We are looking market to market and if is about to get more intense as Jensen, former price to 50p and began marketing itself as there are markets where we can improve our Metro International global editor-in-chief, London’s Quality Newspaper when London Lite overall fi nancial performance by closing down, moves to invest more in editorial quality. was introduced. mostly secondary titles, we will,” says Jensen. “If we are moving up in quality, and that “The Standard has got to a steady The executive is also prepared to consider is our intention, and the traditional market is (circulation) fi gure and I think it is sustainable. taking part in a move towards consolidation in moving slightly down in quality, we are going It’s not in profi t yet, but there is a path to profi t the frees market. to meet somewhere,” Jensen argues. on the publication,” explains Auckland. For instance, in December Metro sold a Whatever the right price for newspapers 60% stake in operations in the Czech Republic turns out to be, the Danish executive believes Financial pressures to local publisher MAFRA. Metro will continue At fi rst sight, Jensen’s vision of the free model to publish the daily Metro in the Czech Republic gradually taking over the newspaper business under licence. seems more than a little misplaced. After all, “I believe as a market matures that you free newspapers may be ubiquitous and have might see some consolidation, so it could be spread round the world like wildfi re, but profi ts that we are in markets where we will be part of a are much harder to fi nd. consolidation but it’s a market-to-market decision In the third quarter to the end of September, not a corporate decision,” insists Jensen. for example, Metro International increased net The company is now going to concentrate sales to $91 million but losses also doubled to on becoming profitable before thinking of $18.2 million and Jensen launched further expansion. a strategic review. But more journalists are going to be hired for The pressures are obvious. the London offi ce. The aim is to help capitalise The company is maturing, the on being a “global” business by producing high expansion a few years ago was quality editorial content that can be sent to all probably over-exuberant and the Metro titles round the world. competition has mushroomed. Compared to the costs of distribution and In recent weeks, there have printing, the costs of boosting editorial are so been signs of cutbacks at Metro much more “decent”. International. Publication of “You can make a difference with relatively a Stockholm real estate paper small amounts of money. It is much cheaper has been suspended to improve to step up a bit in editorial than to launch in a Metro International’s Per Mikael Jensen: “I have no doubts about the free profit margins at the main new city for example,” says Jensen. publishing model whatsoever.” Metro paper there. The one thing that Metro International 6 InCirculation January/February 2008 NEWSPAPERS is definitely not going to do is launch in been CityAM which has established itself as “a the “crazy” London market where News business paper for business people”. International’s thelondonpaper continues to slug In its second year, the paper lost £1 million it out with London Lite. but was profi table between September and December and should make its fi rst annual Metro’s UK march profi t this year. The Murdoch title claims the larger distribution, “You tell me how many newspapers or groups London Lite the bigger readership and you can in the world can actually stand up be certain that neither side is going to blink. and say we are going to be profi table While the London battle has attracted in year three with a brand new many of the headlines, the really signifi cant start-up,” says Lawson Muncaster, phenomenon has been the growth of Metro managing director of CityAM. across the UK. Muncaster, who calls the title Not only is the business profi table, but with “thematic” rather than “niche”, a weekday distribution of 1.36 million copies, insists he is not going to chase Steve Auckland of Associated can trumpet the circulation for its own sake and publication as the fourth largest “national”. that around 100,000 is the right There are also ambitions to overtake the Daily number in London. Mirror’s 1.56 million circulation within the next There is obviously an 12 to 18 months. A Metro launch in East Anglia opportunity for CityAM to go Mike Soutar’s ShortList - good enough to take away rather than discard. is an obvious geographical target. national by taking the London Apart from the numbers, Auckland can business and fi nancial story to the major cities The answer was ShortList - a magazine point to a number of attractive features about of the UK by distributing the paper more widely designed to give a reasonably affl uent young his Metro readership. They are young, of without changing the editorial content. Observers man “instant inhaleable value” on a quick course. The average age of a Metro reader is 36 believe such a move could come this year. commute but also good enough to take away compared with 57 for the Daily Telegraph. This January, CityAM launched a new paper rather than discard. And, according to NRS statistics, the Metro called the Punter aimed at City boys who like a Apart from London, ShortList is distributed readership has more fi rst-degree graduates than fl utter. It will be inserted in the Friday edition of in Manchester, Birmingham, Leeds, Glasgow the Times - 437,000 against 401,000. CityAM and the hope is that distribution deals can and Edinburgh and is expected to get a fi rst As Metro continues to expand, Auckland be done with other publishers around the UK. ABC fi gure of around 450,000. believes the battle between frees and paid-fors For CityAM, a move to other fi nancial “We have a distribution footprint and is not the only show in town. centres such as New York has not been ruled nobody else has one of those (for free In some areas, the hybrid model, such as out in the longer term. magazines.) Once we have got our heads above that deployed by the Manchester Evening News, “I don’t want to re-mortgage CityAM. I want water with ShortList, it may be there is an will work well. to do things a step at a time. But even if someone opportunity to fl ex that national distribution “You have paid in the outskirts and free in the launched a fi nancial paper based on our ideas in network and try to do other things with it as centre. To me, that makes a lot of sense though New York, it wouldn’t stop me going to New York. well,” says Mike Soutar. you have to get the economics of your operation You have got to believe in your own product and It is an example of the current creativity in right to be able to do that,” says Steve Auckland.