The Rise Of The Free Press

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And don't think they haven't noticed. Rupert Murdoch, head of News Corporation, the parent company of U.K. publisher News International, admitted in February that Associated's free Metro may have dented circulation of his top-selling Sun tabloid by as many as 40,000 copies per day. "The record of these free newspapers has been ... to more seriously damage existing newspapers," Murdoch said. In the U.S., at least one prestigious publisher felt it had to join the free movement; the New York Times Company in January bought a 49% stake in Metro International's Boston operation for $16.5 million. Even Associated, in its push to peddle free papers, seems to be cannibalizing itself. Circulation of its own paid-for London title, the Evening Standard, fell 10.8% in the five months to March. Aiming to prop up circulation, Associated late last year launched Standard Lite, a free, slimmed-down, lunchtime version of the evening title. Sources close to the company say only one-third of Standard Lite's readers are willing to buy the bulkier, paid-for evening version. And Britain's Office of Fair Trading last month ended Associated's exclusive rights to London Underground stations to distribute Metro, clearing the way for rivals to offer a free afternoon paper through the same channels. Whoever wins, "We think the Evening Standard would have to go free pretty quickly" afterward, warned Deutsche Bank analyst Mark Braley in a January research note, though Associated swats away the suggestion.

How do free papers make money? By aggregating enough eyeballs — generally young and urban — to lure advertisers. Many newspapers already rely more heavily on ad revenues than on circulation; ad sales represent almost two-thirds of total revenue among British titles, and 57% among those in Germany, according to the World Association of Newspapers (wan). But overall, advertisers are turning increasingly to other media. Newspapers' share of worldwide advertising spending has dropped around 5% in the past 10 years. While it's not clear to what extent free papers are squeezing paid-for titles' revenue, "It's definitely the case that free newspapers are generating significant ad revenues, some of which are unique to them," says Jim Chisholm, strategy adviser to the wan.

Though newspapers' share of the global ad spend is sliding, total ad revenues for newspapers are growing. According to Nielsen Media Research, advertising spending in Britain's Metro climbed 9.2% in 2004, compared to 3.9% across the U.K.'s daily newspaper market. So what's the attraction? With the ubiquity of freesheets in or around transport links, firms are able to combine ads in a commuter's free paper with promotions elsewhere within a public transport network, says Richard Chataway of the Media Planning Group, a London media agency whose clients are regularly publicized inside Associated's Metro. He says advertisers want the commuting audience, and, besides, "It's a quality read."

Not everyone agrees. While the Metro may print more serious news than some of Britain's tabloid papers, "To aim at the mass market, freebies need to be [editorially] neutral," says Jo Groebel, director general of the Dortmund-based European Institute for the Media. Stripped of ideological or political bias, Metro lacks personality, insists Peter Cole, a professor of journalism at the University of Sheffield: "People don't refer to it as 'my Metro.'" As a basic, quick news service, it's only "like switching on the radio news on the hour," Cole says.

Of course, the dumbing-down debate has been around as long as newspapers themselves. "Free papers reach a broad cross section of the population," points out Ingela Wadbring, researcher at the University of Gothenburg's Institute of Journalism and Mass Communication in Sweden. "They are read by young people, immigrants, the unemployed and people with low income. This is very positive." And free news doesn't necessarily mean second-hand news. Staffed with more than 400 journalists worldwide, Metro International fills an average 50% of its pages with news-agency content, down from 80% 10 years ago. At 20 Minutes, wires account for between 20% and 30%. "A year and a half ago, a politician wouldn't give interviews to free newspapers," says Pecquerie. "This is no longer the case."

A robust media environment means that there should always be high-quality publications for those willing to pay for them, even if only on a small scale. But will traditional publishers survive long enough to find a way to compete with free papers? Read the message at the bottom of the London Metro's empty rack: you've got to be quick.