By: Lucia Moses

Free Paper Attracts Local Advertisers, But Few Nationals

by Lucia Moses

from this week’s Editor & Publisher magazine. To subscribe, click


When the first transit paper in the United States hit the tracks
in Philadelphia, many, believing advertisers wouldn’t touch a free
paper aimed at commuters, sat back and waited for it to flop. Their
thinking was right – in part.

In six months, Metro has brought plenty of local advertisers aboard
and become as much a part of the daily commute as the cup of coffee
to go.

But its executives, for all their enthusiasm about being part of a
first in U.S. newspapering, admit it’s tough being different. On the
eve of its Jan. 24 launch, the paper was hit with a lawsuit. It’s
turned over all its top managers. And with the exception of a few
large companies, such as Bell Atlantic (now Verizon), Cellular One,
and T.J. Maxx, Metro has failed to win over big advertisers.

‘I think we’ve been disappointed in the extreme caution shown by
major retailers,’ ceded Linda Fusco Holland, one of Metro’s two
advertising directors. ‘It’s like, free equals junk.’

‘Free’ can carry negative connotations

Swedish media giant Modern Times Group, which publishes Metro, has
had success with its model in cities across Europe: a tabloid-size
paper with bite-size stories designed for the length of a commute.
Metro cuts a deal with a transit system for exclusive distribution
rights in exchange for a piece of the ad revenue and a daily page
that the transit system can use to promote itself.

Modern Times, which had sales of $561.7 million last year and will
begin trading on the Nasdaq stock market in New York Friday, launched
a Toronto edition last month and is pursuing deals in other U.S.
cities with major transit systems, including Boston, Chicago, and
San Francisco.

But in the United States, ‘free’ often carries negative connotations
– and advertisers, generally a conservative bunch, are scared off by
Metro’s free distribution model. And unlike Europe, where a large
percentage of the population uses the transit system, Philadelphia
mass-transit users tend to be lower- and middle-class.

It may be too early to write Metro’s obituary, however. Executives of
the tabloid said they’re making changes to address advertisers’

Metro is adding experienced ad reps to go after major accounts as part
of a doubling of its sales staff to 22. They will have the ability
shortly to zone pre-printed inserts, which could open the door to more
high-end advertisers. And the sales staff will soon be able to show
prospective clients its first audit report, by PricewaterhouseCoopers.

‘Advertisers have a lot of choices, and they want to see the numbers,’
Metro Publisher Dave Munch said. ‘People who read us like us, they’re
picking us up more every week. Now we can show that to the advertisers.’

Metro believes its selling point is its young readership, which has
strong representation in the 25- to 35-year-old category. ‘That’s an
audience that doesn’t necessarily make up a large part of traditional
newspaper readership,’ Munch said. ‘That’s a group [advertisers] really

Making ‘Metro’ ubiquitous

While the sales staff woos advertisers, others are making sure Metro
is ubiquitous. Metro claims a net distribution of about 125,000,
mostly through 1,700 drop-off points in the Southeastern Pennsylvania Transportation Authority (SEPTA) system. But boxes have started
sprouting in office buildings and on college campuses, major
destinations for riders.

On the marketing side, Metro struck a promotional alliance with
local CBS-TV affiliate KYW. Some of the publicity has been unexpected,
though no less unwelcome. During the Republican convention, protesters
were shown on TV news dragging one of Metro’s paper boxes across the

Metro also maintains it has kept its pledge to stay independent of
SEPTA. Editor in Chief Mary Ellen Bornak pointed out that when a
report was issued criticizing the agency’s handling of a trial
involving a boy who lost his foot in an escalator, it was Metro’s
lead story.

Molly Watson, senior vice president at media firm Tierney
Communications in Philadelphia, said she was skeptical at first,
but has been impressed by the paper, with its short takes on
local, national, and international news. ‘We expected it to be
a rag, honestly,’ she said.

And Metro expects distribution to hit 150,000 in the fall when
students return to class. ‘My goal in September is to be the
second-largest paper in Philadelphia,’ proclaimed Joseph Lauletta,
Metro’s circulation director.

‘Daily News’ feels bite

Metro has already taken a bite out of The Philadelphia Daily News,
a tabloid that relies heavily on street sales. Single-copy sales are
down between 2,000 and 2,500, said a spokeswoman for Philadelphia
Newspapers Inc. (PNI), parent of the Daily News and the broadsheet
Philadelphia Inquirer, adding that the drop was smaller than
expected. PNI said it’s seen no impact on its advertising, though,
where linage for both papers combined was up 3.5% in the first half
of this year.

Knight Ridder, parent of PNI, gave the Daily News an extra $1 million
last fall to spend on earlier distribution and heavier promotion in
anticipation of Metro, and the tabloid was hawking copies at half
its 60-cent cover price. On the editorial side, the paper consolidated
its briefs into one page and added a daily report on SEPTA route
changes, ‘with Metro in mind,’ Editor Zack Stalberg said.

Otherwise, the Daily News is sticking by its formula of hard-hitting
news and investigative pieces, and Stalberg doesn’t see the transit
paper lasting. ‘They don’t seem to be cracking the advertising market
at all,’ he said. ‘I don’t think they can win with the kind of content
they have. It’s quick, it’s easy, but it’s also information that you
can get anywhere.’

PNI lost its first round against Metro when it failed to get a court
order stopping its launch. Its lawsuit against SEPTA claiming Metro’s
exclusive distribution rights are unconstitutional proceeds at a
snail’s pace in federal court. Both sides attended a court-ordered
mediation session in the spring, but it went nowhere.

Its legal standing safe for now, Metro plans to further extend its
brand by launching a Web site and starting an affinity club. Looking
ahead to next year, executives are looking at expanding distribution
beyond Philadelphia to southern New Jersey to reach commuters coming
into Philadelphia from there.

Steering Metro’s transformation is Munch, a 23-year veteran of Knight
Ridder whose last post was vice president for advertising at PNI. He
was running his own marketing company for a few years when Metro hired
him in May to do some consulting. He took over as publisher in July
after Jack Roberts, a former Philadelphia Daily News editor, quit.
Munch said after a few weeks, he ‘fell in love’ with the model, which
he believes can reach young readers in a way that PNI couldn’t.

With two established dailies as competitors, media buyer Watson noted,
Metro has a tough road ahead. She said some of her clients turned down
Metro because they considered the ad rates too steep; Metro said it
has lowered its rates after some advertisers complained.

‘Our salespeople are not facing the price objections we used to,’
Co-Advertising Director Karen Bumpus said. Watson remains cautious:
‘Our big question is, can they maintain the momentum they did when
they launched, and will they maintain the editorial integrity?’


Lucia Moses (lmoses@editorandpublisher.com) is an associate editor
for E&P.

(c) Copyright 2000, Editor & Publisher

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