Traditional Dailies Look at Free Paper Options

By: Lucia Moses NEWS ANALYSIS

Three years ago, when a European media conglomerate pulled into Philadelphia with a free daily designed for commuters, traditional dailies publicly pooh-poohed the paper, with its colorful presentation and abbreviated stories.

That was then. Today, they're taking a second look at the free-daily model. The Boston Globe was early in dipping its toe in the water, striking a deal to share help-wanted advertising with Boston Metro, Philly's sister paper and the other U.S. edition of Luxembourg-based Metro International. The Washington Post endorsed the concept when it started its own commuter tab, Express, last month, while its suburban competitor, Journal Newspapers, converted its District distribution from paid to free. A freebie paper readying for launch in New York City later this year will have majority backing from the Tribune Co.

Such experiments aimed at drawing the elusive young reader could be just the beginning. Other companies are rumored to be looking into commuter papers elsewhere. Steve Diller, a partner at consulting firm Cheskin in Redwood Shores, Calif., said he's been told of such papers being planned in three cities. He wouldn't identify the companies behind them or target cities, saying only, "They're serious."

What's happening? "We're bringing young readers back to newspapers," explained Russel Pergament, the founding publisher of Boston Metro who's heading up the New York paper, to be called amNewYork.

Commuter papers have been shown to be read by huge numbers of professionals and attract lucrative advertising, while paid dailies face limited growth prospects and have all but lost the ability to charge a premium for home delivery, said a just-released report from the International Newspaper Marketing Association, "Outlook 2004: The Battle for the Individual."

"The fact is, few companies are charging full-rate circulation except those relying mostly on single-copy sales," the report observed. "And single-copy newspapers are under intense downward pricing pressure from free competitors."

Fans of free commuter papers aren't hiding their sense of vindication. "They're basically admitting this is a good newspaper model and one that is important to the future of newspapers," Jim McDonald, who until recently was publisher of Philadelphia Metro, said of regular daily publishers. "I believe they've realized they can't reach younger readers with their traditional dailies." Then there's the advertising: "They're watching some of the accounts that are going in the (free) paper."

Because their distribution relies on a transit system or other aggregator of people, the Metro model may remain just a big-city phenomenon. But Diller said its lesson for publishers all over is that such papers may be a stepping stone to highly personalized news packages that are distributed digitally.

Saying trends don't favor a mass-reach paper, the INMA report urged publishers to focus on personalized ones, free papers being just one example. As for the lost circ revenue, that may matter little if they can attract younger readers that can be the basis for higher ad rates, Diller added.

Papers are only now realizing what other, more competitive industries recognized in the 1980s: that segmentation is the key to survival. So while some publishers may cling to the idea that niche publications can drive readers to the mother paper, Diller said, "When you scratch beneath the surface, I think there's a recognition that may not play out."