Tuesday, May 27, 2008

Why would this free daily succeed?


The San Francisco Bay Area has become the most saturated place in the country for free dailies. But that hasn't stopped another one from starting. Today, the Palo Alto Daily Post began publishing, becoming that city's second free daily. It's the third paper in that town of 60,000 people if you include a weekly paper. And it doesn't have a website or an online, multi-platform strategy. Yikes!

At this point, you'd think the Palo Alto Daily Post would have two strikes against it -- a lot of competition and no desire to go online.

On the other hand, I can think of three reasons why the smart money would bet on the success of this paper:
    1. The Post's publishers are entering a market already accustomed to the free daily concept.

    2. This paper has figured out that the Internet doesn't help them. Think of all the readership printed newspapers have lost because they put their stories online. People now know that if they want to read a scoop, they should go online. But online advertising isn't working out for newspapers. Nobody is able to fund the costs of newsgathering with an online edition. Maybe the Post guys have figured that out.

    3. And the Post guys are none other than Dave Price and Jim Pavelich, who have started several profitable free daily newspapers over the years in Colorado and California. They know what they're doing.
Oh, and one more thing. They know Palo Alto. They started the Palo Alto Daily News in 1995, which became arguably the most successful community free daily in the nation ("community" as distinguished from "commuter"). Under their aegis, the paper added editions in a number of surrounding cities. And they sold the paper in 2005 for $25 million, according to the following article in the New York Sun headlined "Heresy in Silicon Valley: Traditional Newspaper Launches." Here are a few excerpts:
    In another act of brazen heresy against the prevailing dot-com culture here, the Palo Alto Daily Post, which published its first issue yesterday, has no Web site. At a time when most newspaper owners are looking to the Internet to revive their struggling industry, the new paper's owners, James Pavelich and David Price, brusquely dismiss the need for an online presence.

    "We're a newspaper," Mr. Pavelich said in an interview yesterday as he returned from shuttling his inaugural edition to newsboxes around town. "The Internet is a form of broadcast to me. We're not broadcasters. We just don't have the time to run two businesses."

    ... Earlier this year, the Daily News moved its offices out of Palo Alto, to neighboring Menlo Park. Messrs. Pavelich and Price swooped in, tweaking the competition by renting space in the same building it just vacated. "It was kind of comical to us and we jumped at it," Mr. Pavelich said.

    Executives at the Daily News did not return calls seeking comment.

    ... The Daily Post's inaugural issue featured articles about city volunteers quitting over mandatory fingerprinting and a physician facing charges for prescribing medicine over the Internet to a Stanford student who committed suicide. At 28 pages, the paper is just a tad thinner than the gaunt metropolitan dailies from San Francisco and San Jose.
Alan Mutter took a decidedly negative tone about what he described as a newspaper war brewing in Silicon Valley:
    While Palo Alto is an economically and demographically succulent market where real estate prices continue to climb even to this day, the upscale community hardly seems like a place where multiple, profitable free newspapers would be likely to thrive.
Mutter goes on to say that, in his opinion, Palo Alto isn't a good place for free newspapers and that the subway terminals that Metro attempts to dominate are far better vehicles.

OK, in a year or two we will see who is right. In his interview with the New York Sun, Dave Price points out that when he started the Palo Alto Daily News in 1995 "we had a number of people who were supposedly experts in the newspaper industry saying we wouldn't last six months ... We proved them wrong. Not only was the paper a success in a business sense, it won a tremendous number of awards."