Freebie Fallout p.10

By: TONY CASE

THE VILLAGE VOICE'S announcement that it will distribute free on its home turf in Manhattan left editorial staffers stunned, the advertising department giddy, competitors curious and media watchers wondering why the venerable leftist weekly would surrender a reported $3 million revenue source.
The Voice, which now sells for $1.25, will "blanket" New York with 150,000 free copies and sell an additional 50,000 papers outside the city beginning in April, according to president and publisher David Schneiderman. The move, he said, "allows us to deliver the best journalism and the maximum in market penetration for our readers and advertisers alike."
Voice salespeople and advertisers, thirsty for greater reach, praised the switch, as did retail outlets hoping to increase traffic by carrying the paper. But cynicism dripped off the pens of media critics, who saw the decision as evidence the granddaddy of the alternative press was running for cover.
The giveaway tactic comes as the Voice faces a variety of concerns, real and perceived.
Although the newspaper is profitable ? rumored to be earning $6 million a year for owner Leonard N. Stern, who also runs the pet supply company Hartz Mountain Corp. ? circulation has been slipping for years, plunging from a peak of 142,000 in 1992 to 118,000 last year.
And while the Voice still claims twice as many Manhattan readers as each of New York's dailies and New York magazine, the competition for all those eyes is getting tougher. Even in an age of record newsprint prices, soft advertising and dwindling readership, contenders have come out of the woodwork ? and come on strong.
The New York Press, a free paper, has become a formidable foe, its circulation going from 89,000 in 1994 to 94,000 by last year. The weekly plans to distribute 100,000 copies starting in April.
The New York Observer, a paid broadsheet, and Time Out New York, a paid entertainment guide that surfaced last year, have much smaller ? and unaudited ? circulations, but nonetheless have carved out a niche for themselves.
The salmon-colored Observer has established itself as a must-read among media types and others for whom the latest dirt is gold. In fact, it broke the news that the Voice was going free. Time Out proved such a threat that the Voice launched ? then folded ? its own listings publication.
On a smaller scale, a quirky collection of free neighborhood papers and coffeehouse journals have cropped up all over town.
And as if this mass assault weren't enough, the Voice ? which has long thrived on its raging politics and important cultural criticism ? is plagued by a growing perception that it's become predictable and irrelevant.
"Why didn't they change the content of the paper?" asked Press editor and founder Russ Smith. "It's a relic of the '60s and '70s, but they refuse to acknowledge that that's why people aren't buying it ? and if they don't change the content, people aren't going to pick it up when it's free, either."
Smith is anxiously waiting to see the advertiser response to the Voice changeover, as advertisers view free numbers differently from paid ones. The retailer Macy's, he pointed out, runs ads in the Voice but has a policy against pushing its wares in free publications, such as the Press.
Patricia Calhoun, editor and founder of Denver's Westword, was another among the alternative newsweekly set perplexed as to why the Voice was going gratis.
"In the Voice's case, there are so many newsstands in town, it does seem to speak of a certain desperation," she said. "If it was working the way they were doing it, they wouldn't have been losing circulation. They're obviously feeling the competition from those free papers."
The Voice is one of the last of the alternative papers to carry a price tag. Even its sister L.A. Weekly and Orange County Weekly are free.
Another holdout, the Seattle Weekly, moved from paid to free distribution last November, boosting its press run from 32,000 to 63,000. It plans to distribute 100,000 copies within weeks.
In that paper's case, lost circulation income was offset by substantially lower distribution costs.
"If you run the business calculations, you'll find that paid circulation is a gradually losing game," said Weekly editor and founder David Brewster. "We found that circulation was becoming marginal in terms of contributing to the bottom line."
But Brewster warned that what worked on one coast won't necessarily play on the other.
"It was a good decision in Seattle, but New York is a city that does not have experience with how free weeklies can work well," he explained. "I think it will be a harder sell."
And the playing field is considerably more crowded in the Big Apple, he pointed out. Unlike the Weekly, which mainly goes up against other freebies, the Voice also has the likes of the New York Times and New York magazine to worry about.
Brewster observed that the Voice ? which has a new editor, a new redesign and now a new circulation structure ? appears to be repositioning itself. But, he says, in making such major changes, the paper runs the risk of alienating existing and potential readers.
Not to mention its own employees.
Voice media writer James Ledbetter said his newsroom colleagues were "confused, highly skeptical and a little scared" about the change.
"People don't need to know a damn thing about publishing or business to know that it's rare for a successful, profitable paper to one day declare without warning, 'You know that $3 million or so in cash generated in newsstand sales? Forget it. We don't need it,' " he wrote in his column. "This makes people think the conversion is a desperate move or that, at best, the missing chunk of profit is going to be taken out of the staff."
Ledbetter went on to question what will happen if the scheme doesn't succeed, declaring, "It will be very hard, maybe impossible, to begin charging readers for something they've gotten free, and we could be looking at layoffs or worse."
In a "confidential" 10-page memo to his troops ? which found its way into the daily press ? Schneiderman explained the reasons behind the conversion, and took some potshots at the Voice's rivals.
While touting his own paper's "no-holds-barred reporting and incisive criticism," the publisher slammed the Press, claiming it often ended up in waste baskets. "They aren't playing in our league and never will be," he said, "as they are incapable of producing a quality newspaper."
Schneiderman went on to charge that the Observer's circulation was one of "smoke and mirrors" and that Time Out's sales staff used "bogus numbers."
He accurately predicted that press coverage about the change would be "unflattering," boasting that "the rich, the powerful and the corrupt love to hate the Voice."