RedEye fends off cannibals, celebrates 5th

RedEye celebrated its fifth birthday yesterday by bumping its circulation from 150,000 to 200,000, becoming the largest circulation daily newspaper within Chicago's city limits.

More importantly, RedEye is grabbing younger readers who wouldn't dream of picking up the stodgy 160-year-old Chicago Tribune, the mother paper of RedEye.

"There is very little cannibalization there. It's a different audience," Brad Moore, general manager of RedEye, tells Editor & Publisher.

Advertisers are less interested in the 55+ crowd the Tribune attracts and more desirous of people between 18 and 34 years of age, the target of RedEye. RedEye grabs them with headlines like "Who tops Maxim's unsexy list," "Vote in the Most Beautiful Dog Contest" and "Holidates — Five spots to mix, mingle and find the perfect match for any holiday."

Unlike the Metro International model of free dailies, RedEye doesn't have much wire copy — most of it is staff written and aimed directly at its key demographic.

What Metro lacks is the detailed coverage of local government, schools and business that have been a mainstay in daily papers — the kind of coverage readers, once they buy a home and begin to raise a family, care about.

That kind of coverage is the bread and butter of Arlington Heights-based Daily Herald, northwest of Chicago. The Chicago Tribune, in announcing RedEye's circulation increase, made it clear that the youthful free daily would be going after the Herald.

One way Metro will go after the Herald is by distributing at every Metra commuter rail stop in the Chicago metropolitan area. Any other efforts to go after the Herald's readership weren't disclosed.

RedEye is one of the few commuter free dailies that's profitable. Others, like the Examiner papers (in D.C., Baltimore and San Francisco) or Metro (NY, Boston, Philly) continue to bleed red ink. Last month, the LA Times (which, like RedEye, is owned by the Tribune Co.) said it was considering a free daily modeled after RedEye.

Free Daily Assn. snags me as a contributor

COMMENTARY I was flattered and surprised when Henry Scott, the founding publisher of Metro New York, asked to add my blog to the website for the new organization he is forming, the Free Daily Association of North America. For several years now, I've been posting news and commentary about this emerging industry here at at free-daily.com. From now on, I plan to post new items both here and there, www.freedailyassociation.com. Once you type in that URL, you will be automatically re-directed to a sign-in page. Go ahead and sign up. It doesn't cost anything. And once inside you'll not only find my blog but contributions from many others. And you'll be able to communicate with others in this emerging industry. As Scott put it, it's a "place to ask questions, get answers and get to know one another."

For the record, while I am happy to have my blog hosted by the association, my views are my own. I don't speak for the association or anyone else. I'm independent.

As always, I welcome tips from readers. Many of you take the time to send me inside information or links to stories you've seen. I appreciate the help. I also appreciate corrections, criticism and ideas. My e-mail address is free-daily@hotmail.com. As many of you know, I keep my sources anonymous when asked.

After fire, new free daily goes weekly

After a fire gutted its offices, a 4-month-old free newspaper in Fayetteville, N.C., has switched from daily to weekly. The young paper, called SmartNews, was being warmly received by readers but advertisers weren't as quick to jump on board, Editor and Co-Publisher Randy Foster said in this candid Web posting to readers.

Foster wrote that his 8,000-circulation paper also faced other obstacles "such as being locked out of Wal-Marts, Harris Teeter, Food Lions and Kmart because we wouldn’t pay a fee to distribute at those locations; such as having our newspapers concealed by one or two competing papers being placed strategically on top of our stacks; such as having several of our racks stolen."

He also shed light on the Sept. 24 fire. It was a combination of "a 50-year-old building, an overloaded surge protector, a propane line and several tons of tinder-dry antique furniture," he wrote.

Foster said it is possible SmartNews might return as a daily. "The cold hard reality of business forces us to step back a bit and increase our ad sales while reducing our costs. In time we can start adding back days, and regain our status as a daily newspaper. Those are days I look forward to."

Here's a link to an interview Free-Daily.com did with Foster in July, some six weeks after the paper started.

Metro battered by new competitors

BusinessWeek magazine is questioning whether Metro International, which it describes as the "Free Dailies King," has been dethroned by imitators in France, Spain and its original market of Sweden.

The article points out that one of Metro's toughest challengers is the free daily 20 Minutes, owned by Norwegian media group Schibsted. In Spain, 20 Minutes has 2.4 million readers compard to 1.7 million for Metro. In France, 20 Minutes has 2.4 million readers compared to 2.0 million for Metro.

BusinessWeek talked to analysts who said 20 Minutes has pulled ahead because it has jazzier visuals, a more conversational tone and a stronger emphasis on local news. Metro carries a lot of international stories while "20 Minutes is very French," said Patrick Bartement, director general of OJD, a group that audits media circulation in France.

Piet Bakker, the University of Amsterdam associate professor who tracks free dailies, is quoted by BusinessWeek as saying Metro is in a precarious position because it has no other business to fall back on—unlike 20 Minutes' owner Schibsted, whose holdings also include traditional newspapers, magazines, and TV and online operations. In the battle for supremacy among free newspapers, he says, success may come down to "who has the deepest pockets." Metro International may have to dig deeper to stay in the game.

Salt Lake City paid paper plans free daily

The Salt Lake Tribune plans to launch a free daily called Flash, according to an ad the paper has posted at JournalismJobs.com for an editor who will head a four-person news staff.

MediaNews Group, the owner of the Tribune, was intending to use the name Flash for a free daily it was planning in 2005 in Berkeley, California. San Francisco Bay Area editor David Burgin had been planning to launch the Flash for a year and a half when, unexpectedly, a rival free daily started, the Berkeley Daily News. MediaNews shelved its plans for Flash, but apparently has now resurrected the name for use in Salt Lake City.

"The new tabloid will target Salt Lake City residents as they commute home from work and will be handed out on the street and be in prominently placed boxes Monday through Friday," the ad says.

The Tribune is owned by MediaNews Group, a privately held chain of 57 papers in 12 states headed by Dean Singleton. Ironically, while MediaNews was beaten to market in Berkeley, it ended up acquiring the Berkeley Daily Planet a year later as part of its acquisition of papers previously owned by Knight Ridder in the Bay Area.

Metro hammered in Philly, Boston

Metro International's free dailies in Boston and Philadelphia reported lower sales in the third quarter compared to the same period last year. But the company's New York edition's sales shot up 18 percent for the quarter.

Boston's 12 percent decline is being attributed to a change in sales directors. In Philadelphia, a 5 percent decline was blamed on increased competition — the once moribund Philadelphia Inquirer/Daily News has roared back to life with new ownership led by a successful local advertising executive, Brian Tierney.

While sales were off in Boston due to personnel changes, Metro has stablized its sales force in New York. (Word on the street is that Metro's free daily rival, amNewYork, had a strong quarter, too.)

The details about sales in the U.S. emerged today as Metro announced its third quarter results. The company warned analysts on Oct. 13 that the results would show an $18 million loss, double the amount in the same quarter last year. The numbers today are pretty much in line with the guidance Metro provided earlier.

But back on Oct. 13, Metro said its board was going to devise a plan to stem its losses by deciding where it would continue to invest. The implication was that the board would also decide where it would stop investing — which would probably mean the sale or closure of some of its 70 editions worldwide. The board is apparently still considering its options; no announcements about closures or sales were made today.

Free dailies turn nonreaders into readers

A New York Times story today about a new paid paper in Spain has some interesting insights about that country's free daily newspaper market. The new paper is named Público, which is hoping to reach young, left-leaning readers who are apparently underserved in that country. Here are three paragraphs from the story by Victoria Burnett:

"Freesheets, rather than stealing market share in Spain, have been converting nonreaders into readers, filling a gap left by the lack of Spanish tabloids. Circulation of freesheets has shot from one million to about five million in the past five years, according to the World Association of Newspapers.

"This is partly because newspaper readership in Spain -- a country of conversationalists who crowd sidewalk cafés and village squares -- is among the lowest in Europe. The country's three main national newspapers, El País, ABC and El Mundo, do not sell a million copies between them.

"Figures from the World Association of Newspapers show that about four million newspapers were sold each day last year in Spain, which has a population of about 40 million, compared with nearly double that number in France, where the population is about 60 million."

Spain has three healthy free dailies led by the 2.3-million circulation "20 Minutos" which began in the publisher's basement six years ago and last year became the country's largest circulation paper. Half the papers distributed in Spain are free.

Switch to free gets a warm review

The suburban Phoenix East Valley Tribune's switch from paid to free distribution has received a warm review from a local journalism professor who previously was editor of the Minneapolis Star Tribune and past president of the American Society of Newspaper Editors. Tim McGuire of Arizona State University's Cronkite School of Journalism still isn't sold on the concept of free dailies, but he says that the East Valley Tribune's debut of its new format Wednesday "was better than I had hoped or imagined." McGuire writes:

"The quality of the debut edition of the EV Tribune indicated to me that this is not a slap-dash desperate effort, but rather it is a valid, laudable attempt to figure out the puzzle. The industry should celebrate that effort."

The first issue included this note from Executive Editor Jim Ripley who admitted that readers didn't like changes made to the paper in August and that the new format reflects what people wanted. He explains the thinking that went into the switch and then answers a key question about home delivery of the 102,000-circulation paper: "Why should I pay for a subscription if I can get it free?" Ripley's answer: "Well, you get home delivery seven days a week. You get all of the daily sections, sports and nation/world, and get all the weekly sections that I enumerated above. If you are a regular news and sports consumer, you’ll want the full package on your driveway."

The swtich attracted attention from other media:

• Local news talk station KTAR reported that the Tribune will be delivered to 500 locations free of charge, and that the number will increase over time. Publisher Julie Moreno is quoted as saying she expects some subscribers will later on decide only to read free issues. "Over time, we may see that some people will transition that way. But, as long as they're reading, that's our main concern," Moreno said.

• The Business Journal of Phoenix quotes Moreno as saying the switch will allow the paper to do a better job targetting news and advertising. "Part of this process involves creating separate editions of the paper for the specific geographic areas we serve. That way we can bring you local news and advertising specific to where you live," she said.

Three home delivery models emerge

When it comes to home delivery, the free daily industry now has three business models:

• The newest approach is being pioneered by the Mesa, Arizona, East Valley Tribune (see items below and above), which is now giving away papers in racks and retail locations instead of charging readers. The free paper is all local and tabloid sized. The Tribune is still charging home subscribers, but they are getting a larger paper that, in addition to the all-local tabloid section, includes sections for sports, world/national news, features and comics.

• The new Mount Airy, N.C. paper, The Messenger, is taking the opposite approach — delivering papers to homes for free but charging 50 cents at retail and rack locations.

• And then there are five free dailies that are delivering papers to all homes in certain areas, whether requested or not by the homeowner. The five (we know about) are the Examiners in Washington, San Francisco and Baltimore, and The Greensburg Tribune-Review in suburban Pittsbugh, Pennsylvania, and Today's Local News in northern San Diego County.

In a year or two, we should go back and look to see which approach was most successful.

Suburban Phoenix paper starts free paper

Cox Enterprises, one of the biggest newspaper publishers in the United States, has jumped into the free daily business with both feet. The Mesa, Arizona-based East Valley Tribune, a paid broadsheet daily with a 102,000 circulation in the suburbs east of Phoenix, plans tomorrow to introduce a free tabloid that will include most of its local reporting. Paid subscribers will continue to get the full newspaper including national and world news, sports, classifieds and features. But the free paper should help the Tribune reach readers who aren't subscribing to a daily newspaper, making the paper more effective for advertisers. The free edition will be zoned geographically.

'Israeli' may soon be sold, perhaps to Metro

Globes, a daily business newspaper in Israel, reports that Shlomo Ben-Tzvi is in advanced negotiations to sell his free newspaper “Israeli" to an unidentifed international company. In a separate development, Metro International has convinced a Tel Aviv judge to issue a temporary restraining order stopping businessmen Eli Azour and David Weissman from using the word "metro" in the title of their free daily. In its petition to the court, the company said that it was planning to launch “Metro” in Israel and that it was seeking a distributor for the newspaper. Globes' Yael Gaoni writes, "[I]n view of these developments, it cannot be ruled out that Metro International is the party interested in acquiring 'Israeli,' and turning it into the Israeli edition of 'Metro.'"

Metro losses double; Will some editions go?

Metro International, publisher of free dailies worldwide, has announced that its third-quarter losses will reach $18 million, double the amount in the same quarter last year.

Chairman Dennis Malamatinas said the board is "identifying core markets where Metro should continue to invest." That statement suggests the board will also pick markets where it will pull the plug on money-losing papers.

Metro appears to be in a free fall without a permanent chief executive at the helm. Longtime chief executive Pelle Törnberg, who officially left July 31, unofficially had been out the door months earlier. The new CEO, Per Mikael Jensen, won't start until November 1, the earliest date he could be released from his job as the top executive of Denmark's government TV network. Yet the statement issued Friday makes it clear that the board is beginning to stem losses before Jensen takes over.

By the way, of the $18 milllion in losses, $5 million were attributed to Törnberg's departure and "consultancy costs." Quite a golden parachute for the CEO of a company that has only made money in one of its 12 years of existence.

Chicago bans home delivery of free papers

Free newspapers in Chicago have discovered that a new law intended to stop the indiscriminate door-to-door distribution of menus, brochures and other advertising flyers also bans many circulation practices for free newspapers. The website Inside and freepress.net report that Chicago's Aldermen, by a 50-0 vote, made it unlawful to distribute free “newspapers, periodicals and directories of any kind on any public way or other public place or on the premise of private property in the city in such a manner that it is reasonably foreseeable that such distribution will cause litter.”

That pretty much ends the distribution of free newspapers if a politician considers them to be "litter." Of course the law isn't being enforced evenly, so publications that the politicians like can continue to distribute.

The gimmick here is that the public was told that the law was designed to control litter. Who is against banning litter? Reminds us of news rack laws that are proposed to stop the proliferation of unsightly racks. Politicians will say anything to get the public to support their efforts to squelch a free press. The only question is whether publishers like those at the Tribune, Sun-Times or RedEye editorialize against this anti-free press effort or sit on their hands? Of course if they benefit from the silencing of smaller, independent competitors, they won't say a thing.

(At right is Wrigley Field, home to the Chicago Cubs. It's rumored that Dallas Mavericks owner Mark Cuban wants to buy the team from the Tribune Co., owner of the Chicago Tribune and RedEye free daily.)

'Israeli' newspaper back from vacation

When you're a newspaper in trouble, isn't in interesting how the vultures (i.e. reporters from other papers) begin to circle. The management and staff at the "Israeli" probably know that feeling. But they're back in business after a two-week holiday. Owner Shlomo Ben-Tzvi is printing again. Globes online says the Israeli's circulation has been reduced from 40,000 a day to "reportedly less than 20,000 a day."

The Israeli is facing competition these days from Israel Today, or Israel Hayom, owned by American casino billionaire Sheldon Adelson, who has close ties to former prime minister Binyamin Netanyahu. Adelson was a partner in the Israeli, but was pushed out in a court dispute. Now he's distributing more than 150,000 papers a day — far more than the 20,000 or less circulated by the Israeli.

How not to distribute a free daily newspaper

COMMENTARY: We're frustrated to read that a group of environmentalists is petitioning British Prime Minister Gordon Brown to have him ban hawkers who give away London's free daily newspapers. Don't get upset at the environmental group Project Freesheet, headed by Justin Canning. Canning is simply taking advantage of an opportunity handed to him by the thoughtless distributors of London Lite and thelondonpaper. Both papers have been liberally handing out papers to subway riders (or passengers of the "tube" as they say in England), many of whom drop the paper seconds later, creating a very visible mess. Canning has documented the mess on videos posted online.

This policy of flooding a market with free papers in the hopes that they will be read by somebody reminds us of the techniques employed by the Examiner newspapers in the United States. The Examiners dump their papers on people's doorsteps, regardless of whether the resident wishes to have them or not. Stopping the Examiner has proven to be next to impossible, as residents in Baltimore, Washington and San Francisco have discovered. Many are suing the Phil Anschutz-owned newspaper and lobbying for legislation to ban such distribution.

These sloppy tactics cause several problems:

1. They cause observers to think free dailies have little or no value. That makes it harder to sell advertising. It's better to have readers thinking the paper is in demand so that they hold on to their copy of it, and look forward to getting one the next day.

2. They lead to legislation restricting distribution. Such laws hurt newspapers that attempt to distribute their papers in a responsible fashion.

3. They give the public the impression that publishers don't care about the environment. Now we could argue that newsprint is a renewable resource (trees are a crop just like barley, corn or soy beans), but it still looks like waste to a public that is growing increasingly sensitive to environmental issues thanks to the global warming controversy.

What's needed here is self-policing. If newspapers, whether in London or Baltimore, aren't careful about how they distribute (and how that distribution looks to the public) they may find that they can't distribute in many places in the future.

Bluffton Today growing at 20% clip

For a corporation like Morris Publishing, with revenues of $92 million in the second quarter, a unit that generates $1.17 million in sales might not seem significant.

But Morris, a chain of 27-daily newspapers mostly in the South, decided to make a special mention in its latest quarterly report (page 15) about its one free daily, the 16,500-circulation Bluffton Today, whose revenue increased $200,000, or 20.5 percent, in the quarter compared to the same period in 2006. Bluffton is a rapidly growing town next to Hilton Head and about 20 miles from Savannah.

While no more figures were offered for the Bluffton paper, we surmise that the paper's sales for the quarter went from $975,000 in 2006 to $1,175,000 this year. That would put the paper's revenues at around $4.7 million a year, give or take.

The report noted that the paper had "significant gains in the retail specialty publications produced and distributed by Bluffton, but not a part of the main newspaper."

So we're not sure how much of that gain was due to Bluffton Today. Still, at a time when newspaper ad revenues are falling (Morris reported a 7.1 percent drop companywide for the quarter), it affirms that free dailies are on the right track.

Bluffton Today is well designed and edited. It does a thorough job covering local news. We're also impressed by its method of displaying the pages for online readers. It's almost like holding a newspaper in one's hands.

The quarterly report gives us no idea what it costs to produce the Bluffton paper, but if the paper was profitable, it's certain that would have been mentioned. But that's not a put down — it may well be on the way to profitability if revenues are increasing at a 20 percent clip.

We have to wonder whether Morris will roll this prototype out to other markets.

L.A. may not have a pot of gold

COMMENTARY: A few months ago, when one of billionaire oilman Phil Anschutz's guys told me they weren't going to launch an Examiner free daily in Los Angeles, I asked why? It's the nation's No. 2 media market, an internationally known city with a five-county population of 17 million. He asked me, "Why do you think they don't have an NFL franchise?" Because the Rams moved to St. Louis and the Raiders back to Oakland? No, because LA is a dysfunctional mess. It's too big of a media market to cost-effectively advertise anything, including an NFL team, and the best you can do is divide the place up in to smaller portions. But that doesn't work because people live in one place and work in another. Plus you have a situation similiar to Miami, where a growing number of people speak Spanish and are not legal residents, limiting their purchasing ability. For many advertisers, LA doesn't make sense anymore. At least in English. La Prensa and La Opinion seem to be doing quite well.

And that brings us to the Tribune Company's plans to launch in LA a free daily oriented to the English-speaking 18-34 age group, similar to the company's RedEye in Chicago. While LA Times publisher David Hiller hinted at such an idea last week, it won't happen until Sam Zell has taken control of parent company Tribune, which could be six months or longer.

But they'll still be first. Anschutz has costed out the market and found it to be too expensive. Who knows, maybe Metro International or Dagsbrun (backer of the new BostonNOW) might want to enter LA, but how could they match the delivery and advertising infrastructure of the LA Times?

If the LA Times starts a RedEye clone in LA, it won't happen until Zell has full control. Maybe spring 2008.