Free dailies shock traditional dailies

The Economist's online edition has a lengthy article about the problems facing the newspaper industry and what moves might make sense on the Internet. It's all stuff we've heard before. But the last four paragraphs of this special report sum up nicely what's happening in the world of free dailies. Those four paragraphs follow:

The most shocking development for traditional newspapers has been the wild success of free dailies, which like the internet have proved enormously popular with young people. Roughly 28m copies of free newspapers are now printed daily, according to Metro International, a Swedish firm that pioneered them in 1995. In markets where they are published, they account for 8% of daily circulation on average, according to iMedia. That share is rising. In Europe they make up 16% of daily circulation. Metro calculates that it spends half the proportion of its total costs on editorial that paid-for papers do. In practice that means a freesheet with a circulation of about 100,000 employing 20 journalists, whereas a paid-for paper would have around 180. Metro's papers reach young, affluent readers and are even able to charge a premium for advertising in some markets compared with paid-for papers.

“The biggest enemy of paid-for newspapers is time,” says Pelle Törnberg, Metro's chief executive. Mr Törnberg says the only way that paid-for papers will prosper is by becoming more specialised, raising their prices and investing in better editorial. People read freesheets in their millions, on the other hand, because Metro and others reach them on their journey to work, when they have time to read, and spare them the hassle of having to hand over change to a newsagent.

Some traditional newspaper firms dismiss free papers, saying they are not profitable. Carlo De Benedetti, chairman of Gruppo Editoriale L'Espresso, publisher of la Repubblica, for instance, says that Metro loses money in Italy and that other freesheets are struggling. Globally, however, Metro has just become profitable.

Consultants say that lots of traditional newspaper companies are planning to hold their noses and launch free dailies. In France, for instance, Le Monde is planning a new free daily, and Mr Murdoch's News International is preparing a new free afternoon paper for London, to be launched next month. Deciding whether or not to start a freesheet, indeed, perfectly encapsulates the unpalatable choice that faces the paid-for newspaper industry today as it attempts to find a future for itself. Over the next few years it must decide whether to compromise on its notion of “fine journalism” and take a more innovative, more businesslike approach — or risk becoming a beautiful old museum piece.

Free daily sparks paper war in Denmark

The Associated Press and others are reporting that a new free daily that has hit the streets of Copenhagen has sparked a newspaper war among Denmark's major newspaper companies. As a result, at least three other free dailie are expected to be launched this year. The new entry is "dato" (translated as "date"), which was being handed out at key traffic points and will be delivered to doorsteps and driveways starting today.

Upstart free daily takes on Dean Singleton

A businessman in Eureka, California, has launched and generously funded a free daily newspaper to go up against that town's 152-year-old paid-circulation daily owned by Dean Singleton's MediaNews Group. The businessman, Rob Arkley, explains in this story in the San Francisco Chronicle that he simply started the paper because he wanted more local news coverage than the other paper was providing. Author Joel Davis says the battle is a "pound-the-pavement tussle between two dailies that are constantly trying to scoop each other, something rarely found in big cities anymore, let alone towns with populations under 30,000." The upstart paper has a bigger newsroom than that of Singleton's. The reporters are paid more and get better benefits. The paper is printed on a new multi-milliondollar press using paper that's thicker than what Singleton uses. Says owner Arkley, "I get tired of the Times-Standard saying 'Rob is trying to put us out of business.' I mean [the Times-Standard and parent MediaNews] are a monopoly in every market they are in, whining like a bunch of babies. ... The first lick of competition they get they scream like they are getting (screwed). ... They are not having any fun."

Free dailies profitable, Singleton isn't

EDITORIAL
One of the startling quotes in the San Francisco Chronicle story about the new free daily in Eureka, Calif. (see above) is the claim by MediaNews CEO Dean Singleton that "No free daily in America has ever made a profit."

He's wrong, of course. He's either misinformed or hates the concept of free dailies so much that he's willing to misstate the facts.

Free dailies have been around for decades, and they've been making money. Singleton, whose office is in Denver, doesn't have to go far to find money-makers. They're in Vail, Aspen and Summit County, Colorado. Swift Newspapers of Reno, Nev., which owns more free dailies than anyone, is making money and has just added a new free daily in South Lake Tahoe.

And Singleton has just acquired a group of six free dailies in the San Francisco Bay Area, the flagship being the Palo Alto Daily News, which was profitable nine months after it started in 1995. It was so successful that the Knight Ridder chain bought it last year because it was cutting into the sales of KR's San Jose Mercury News. If the Palo Alto paper wasn't profitable, one must ask where they got the money to keep it going for 10 years. Knight Ridder purchased the Palo Alto Daily News Group in 2005. No word on whether it remained profitable after Knight Ridder got its hands on it. Singleton is now buying Knight Ridder's papers in Northern California including the Palo Alto group.

Now it is true that Phil Anschutz, owner of the San Francisco Examiner and Washington Examiner, hasn't made money with his conservative dailies, but, as a billionaire, he probably doesn't care. On the other hand, Singleton's MediaNews was the only major American newspaper chain to lose money in the first quarter of 2006.

NY Times: Free dailies growing in Europe

The growth of free daily newspapers in Europe has drawn the attention of the New York Times, which reports that so-called free sheets now account for more than half of all papers circulated in Spain and more than 30 percent of those in Portugal, Denmark and Switzerland. The news peg for this story is that News Corp., publisher of London's Sun and Times, confirmed plans to start a free newspaper in Britain next month, and that Le Monde and Le Figaro in France are said to be working on free newspapers as well. The story also notes that in Germany, where there has been the most resistance to the free daiy trend, a free financial tabloid is set to start next Monday.

The NY Times says, "While established publishers have been dabbling with free papers for some time, the latest start-ups represent a new stage in the development of the market, said Aura Iordan, business analyst at the newspaper association. The publishers had started free sheets primarily for defensive reasons, to fend off the threat from the likes of Metro. But now, she said, they view free dailies as a possible source of profit."

Murdoch to start evening paper in London

On Sept. 18, London will get its fourth free daily newspaper -- called thelondonpaper -- a colorful, 48-page afternoon publication aimed at a young, upscale audience. Owned by Rupert Murdoch's News Corp., it will have an initial circulation of 400,000 and will be distributed between 4:30 and 7 p.m. using 700 distributors. The paper will have a staff of 70, including an editorial team led by Stefano Hatfield, a former editor of Campaign, a marketing trade magazine.

London's first free daily was Metro, launched in 1999 by Daily Mail owner Associated Newspapers. Second was the Evening Standard Lite, which started in late 2004. The third was the independently owned City AM, which began last September. A fourth free daily is "a further endorsement of the free model which we think will be a big and prosperous market," City AM chief executive Jens Torpe told the LA Times.

Free dailies hurt paid papers in Hong Kong

The South Morning China Post reports that three free dailies in Hong Kong, along with two paid Chinese-language dailies, are eating into the advertising revenues of that city's biggest newspapers. (Note that the story gives figures in Hong Kong Dollars which are trading at about 7.8 for every U.S. dollar.) The city's No. 1 newspaper, the Oriental Daily News, saw its revenues plunge 10 percent to HK$2.02 billion ($259 million U.S.). But the three free papers combined HK$774 million ($99 million U.S.) or 10 percent of all newspaper advertising dollars in the first half, according to Nielsen. Compare that with their combined HK$572 million ($73 million U.S.) of revenue or a 6.4 percent share in the preceding six months.

Of the three:

• Metro, HK$342 million ($44 million U.S.), up 8% over same six months last year

• Headline Daily (owned by Sing Tao), HK$221 million ($28 million U.S.), up 90% over same period last year

• Am730 (owned by property-agency magnate Shih Wing-ching), HK$211 million ($27 million), up 50% over same period last year

[Jan. 27: Hong Kong free daily Am730 closer to profit] [Jan. 26: Ads grow at Hong Kong's 3 free dailies]

Does RedEye have ideas worth copying?

Should a newspaper that has never made a profit be held up to the industry as a commercial success to be copied? That may sound harsh, but that was our initial impression of a story the American Press Institute posted with the headline "The Other Side of the Story: Alternative Print Products." On one hand, it's nice to see the mainstream media giving credit to free daily newspapers, but why the Chicago RedEye? The RedEye is a youth-oriented free daily owned by the Tribune Co. It has access to the Chicago's Tribune's vast editorial resources. It also spends a lot of money on market research, going so far as to give Starbucks gift certificates away to young readers who complete the paper's questionnaire. But if the paper isn't making money, are any of its ideas are worth copying?

'Sources' lied about Examiner price

When the San Francisco Examiner was sold by the Florence Fang family to billionaire Phil Anschutz in 2004, the price wasn't officially disclosed. But the San Francisco Chronicle and other newspapers quoted a "source" as saying the price was $20 million. A good number for a free daily that hadn't made money in years. Now, according to the LA Times, the price was actually $10.7 million. What's more, Anschutz later gave away the Examiner archives, dating back to the years when Hearst owned the paper, to UC Berkeley for a $18.4 million tax deduction — which suggests he pocketed as much as $7.7 million on the deal.

These facts emerged at the end of a long LA Times profile of Anschutz and his various business activities. In 2005, Florence Fang -- who owned the Examiner from 2001 to 2004 -- sued Anschutz and her former publisher, Scott McKibbin, who later went to work for Anschutz, alleging that they rigged the sale of her newspaper. She claimed McKibbin didn't shop the paper around to prospective buyers, but instead leaked confidential information to Anschutz. McKibbin's brother Ryan, the former Denver Post publisher, was on Anschutz's payroll, too.

While the defendants officially denied any wrongdoing, Anschutz settled the case out of court. Terms weren't disclosed, but one requirement was that Anschutz's deposition be destroyed.

The LA Times also learned that McKibbin, who has since left Anschutz's organization, was being paid $420,000 a year in salary and received a $180,000 bonus and a country club membership.

The rest of the LA Times story provides an insight into the character of Anschutz, who it appears plans to build a chain of free daily newspapers. (Editor's note: We're aware that LA Times doesn't have a track record of being fair to conservatives -- remember the attack on Arnold Schwarzenegger a few days before the election? -- so this story might contain errors. If corrections are made, or Anschutz comments publicly, we will provide that information on this page.)

SF Examiner gets 3rd editor in two years

The San Francisco Examiner has promoted James Pimentel from managing editor to executive editor, the AP reports. He will be the free daily's third executive editor in two years. He replaces Malcolm Kirk, who resigned after seven months on the job. Pimentel began his newspaper career at the Oakland Tribune in 1984. He joined The Examiner in 2001 as sports editor before becoming managing editor in 2003. During his tenure there, Pimentel has led the paper's transition to tabloid format and its launch of zoned editions in San Mateo County.

RedEye launches reader loyalty program

The Chicago Tribune's youth-oriented free daily RedEye has relaunched its web site and renamed its reader loyalty program. The web site, www.redeyechicago.com, now includes breaking news, reader feedback forums, quirky video clips and Sudoku Mega, a 16x16-square version of the newspaper's Sudoku puzzle as well as features out of that day's RedEye. The reader loyalty program was called RedEye Rewards but is now branded as iSociety. Members get "VIP access" to bars and clubs, contests, monthly happy hours, giveaways and invitations to "the area's hottest happenings." RedEye and the Chicago Sun-Times' RedStreak were launched in 2003 as attempts by the city's two major papers to court younger readers. RedStreak died last year, leaving RedEye alone in the free youth daily category.

Italian media group may start free daily

Italy's Editoriale L'Espresso SpA, publisher of the paid daily La Repubblica, is thinking about entering the free daily market to compete with three other free dailies, according to the AFX news agency. "We are examining the file. We don't know if we will do it. It is a very difficult market. Those who do it at the moment lose money. We are undecided,' one source told AFX, adding that a decision is not expected before September.

Free daily thrives as paid paper implodes

Talk about being in the right place at the right time. The 100-plus-year-old Santa Barbara News Press has lost seven of its top journalists in the past week in a dispute over newsroom meddling by a billionaire owner. In Feburary, Jeramy Gordon (photo) quit his job at the Palo Alto Daily News, moved to Santa Barbara and launched his own free daily called "The Santa Barbara Daily Sound." As Editor & Publisher Magazine reports, the paper is gaining momentum, with enough advertising growth to boost it beyond its original eight pages to 12. With $250,000 in seed money that he raised from family and friends, Gordon is operating on a shoe-string budget with just three full-time employees. Since the paper started in March, Sound's circulation has increased from 3,000 to 5,000.

Free daily circulation jumps by 2 million

Professor Piet Bakker, in his Free Daily Newspapers newsletter, notes that that combined circulation of free dailies worldwide has grown from 25 million to 27 million in two months. He says that's due mostly to new free dailies in Europe, where circulation is almost 19 million. His newsletter has a breakdown of circulation and titles. He doesn't mention much about what's happened here in the United States and Canada, where free dailies have launched in Santa Barbara, Calif.; Manchester, N.H.; Smithers, B.C., Canada; Marco Island, Fla. and San Francisco. Maybe it's time we, at free-daily.com, put together our own list of free dailies in the United States?

Virginian-Pilot to start youth free daily

With the demise of "Dirt" in Boulder, Colo., and the "Red Streak" in Chicago, and "Dose" in Canada, it's surprising that the Virginian-Pilot in Norfolk, Va., plans to launch a free daily this fall oriented toward youth. The new free tab -- called "Link" -- will offer quick-read news stories and content focused on lifestyle and recreation, spread over 32 to 40 pages, with a daily press run of 40,000 copies, according to a story in Friday's Virginian-Pilot. Link will have its own 12-person staff and will have access to the Pilot's stories and wire services. Link's target will be readers between 18 and 34 years old, who read newspapers infrequently and don't subscribe to the Pilot, said David Mele, Link's publisher and general manager. The Pilot reaches between 25 percent and 45 percent of this emerging audience, he said. Arnie Applebaum, general manager of the Washington Post's free daily Express, is quoted as endorsing the concept: "This is a good way to reach the younger audience." While some youth papers have failed, American Journalism Review editor Rem Rieder some have been more popular and profitable than expected.

SF Examiner loses editor after 7 months

For the third time in two years, Phil Anschutz's San Francisco Examiner is in transition between editors. Malcolm Kirk, who was named executive editor of the San Francisco Examiner in December, has left the free daily and is returning to Canada. CanWest MediaWorks Publications Inc. announced today (July 7) that Kirk has been appointed publisher of the Calgary Herald. Kirk served as editor-in-chief of the Calgary newspaper from 2003 until 2006 and has experience at several of CanWest's other newspapers, including the Vancouver Province and the Montreal Gazette, the company said. In San Francisco, Kirk had replaced Vivienne Sosnowski, who was executive editor of the Examiner for 17 months before being transferred to the Washington, D.C., Examiner. No word from the Examiner on why Kirk left or who will replace him.

Examiner's dress code - no denim or minis

At the struggling Washington Examiner, one would think they'd have more important things to worry about than dress codes. The paper, after a big start, seems to be losing advertisers every week and it appears the paper has never developed a regular readership. But apparently, according to www.wonkette.com, management has issued a dress code after Executive Editor Viviene Sosnowski showed up in a torn denim mini-skirt and studded collar. Highlights:

• Dress hem lines cannot be higher than 3 inches above the knee.
• Any type of denim or material resembling denim is inappropriate.
• No khaki- or Docker-style pants.
• "Bras, sport bras, tank tops, etc. (must be fully covered by clothing)"
• "Clothing is not to be overly tight nor draw undue attention to ones [sic] self"

"Employees violating the code may be sent home, without pay, to change and may be subject to disciplinary actions up to and including termination. Employees are also reminded that it is your responsibility to keep your work area clean. Papers are not to be stockpiled, work information is to be put away daily, excessive trash must be removed. If you see papers on the floor in your area or common areas, take the minute necessary to pick it [sic] up and throw it away or straighten it up. Employees are not to eat meals at desks or in work areas. All locations have break rooms! Do not keep food at your desk or store food in your work area."

Let's hope the memo, with all of its grammatical errors, wasn't written by anyone in editorial.

New free daily launches on Florida island

A newspaper war has erupted on Marco Island, a community of 15,858 south of Naples on Florida's west coast. The island has two weekly newspapers, the Sun Times and the Marco Eagle. On June 5, the Ft. Myers News-Press acquired the Sun Times. Possibly in response to that move, the other weekly, the E.W. Scripps-owned Marco Eagle has become a free daily and changed its name to the Marco Daily Eagle. Scripps also owns the nearby Naples Daily News, so it is likely that the free daily was a preemptive move to keep the Ft. Myers paper from launching a free daily on the island. The new daily's editor is Tom Rife, who was at the Naples paper for 31 years as sports editor and then became a high school teacher.

169 free dailies in 2005; 27.9 million circ

The World Association of Newspapers (WAN) reports that there were 169 free daily newspapers in 2005 with a combined circulation of 27.9 million daily. WAN said 18.6 million of that circulation was in Europe.

In Spain, free daily distribution represents a huge 51 percent of the market; in Portugal 33 percent; in Denmark 32 percent, and in Italy, 29 percent.

Free dailies represent 6 percent of the world's daily newspaper circulation of 464 million, according to WAN.

Paid chain feels heat from free papers

In Canada, the parent company of five paid tabloid dailies, Quebecor Inc., has announced that it will cut 120 editorial jobs in an effort to save $4.6 milllion (Canadian) due to competition from free dailies. "The company has lost readership amid the rise of free commuter papers in several cities, including a significant erosion at its flagship daily, the Toronto Sun," the Globe and Mail says in this story.

What a PR machine Metro must have

Here's a link to one of the most inaccurate articles we've seen on the concept of free daily newspapers. The article in Media Life magazine makes the ludicrous claim that Metro brought the concept to the United States and caused a revolution.

Long before Metro arrived in the U.S. in 2000, free dailies were booming in Colorado. The first started in 1972 when the Colorado Daily, then a student newspaper at the University of Colorado, was kicked off of campus by the school's regents over the paper's views on the Vietnam War. It became a community newspaper, albeit a very left-wing community paper, serving Boulder, a very left-wing town.

The Colorado Daily -- a free tabloid distributed in stores, restaurants, workplaces and schools -- became a model that within a decade was being replicated in Aspen and Vail. By the 1980s, more free dailies popped up in Colorado -- in Breckenridge, Steamboat Springs and Glenwood Springs. A second started in Aspen. In the 1990s, more started in Telluride, Grand Junction and Denver.

In 1995, some free daily newspaper people from Colorado went to Northern California and started the Palo Alto Daily News.

The Palo Alto Daily News was profitable within 9 months and became a model for other free dailies. Unlike the Colorado Daily, the Palo Alto Daily had more of a centrist approach to the news. The Palo Alto paper also developed a stunningly broad advertising base, with a large number of small ads (quarter page or smaller) filling as many as 120 pages per day.

Within 10 years, the Palo Alto paper had spun off separate editions in Redwood City, San Mateo, Burlingame and Los Gatos.

Its growth apparently was a concern at the long-established San Jose Mercury News, 12 miles south of Palo Alto. The parent company of the Mercury News, Knight Ridder, purchased the Palo Alto paper in 2005. The price was not disclosed. But the sale occurred just months before the Knight Ridder chain came under attack by some of its shareholders, who demanded that the company's assets be sold to the highest bidder.

(As of this writing (June 20), it is believed that the Palo Alto Daily will be sold on June 27 to the McClatchy Co., which has agreed to sell it to MediaNews (the parent of the Denver Post). The McClatchy-MediaNews transaction is being held up by the Department of Justice, which is conducting an antitrust review to see if MediaNews will have too many newspapers in Northern California if the transaction occurs.)

Getting back to this piece in MediaLife -- the author talks about how Metro is growing, but devotes just one sentence to the important issue of profitability. In New York, it's doubtful Metro is making any money, however another free daily not mentioned in the article, AM New York, is on the verge of profitability, according to hints dropped by parent company Tribune Co., and might even be in the black by now.

This story in MediaLife also incorrectly claims that Phil Anschutz, owner of the San Francisco Examiner, got the idea of going to a free tabloid from Metro.

First, Anschutz bought the Examiner a year after it was converted from a broadsheet to a free tabloid. Second, when the previous owners, the Fang Family, converted the paper to a free tab, they said they were doing it based on the success of the Palo Alto Daily News, which is about 30 miles south of San Francisco. They didn't mention Metro.

This MediaLife story isn't the only article to make that error. See the second part of this correction in the Washington Post.

The next time somebody writes about free dailies, they should do a better job researching the history and not accept the claims Metro's PR machine apparently is churning out.

NY Times to use Metro for classifieds

The New York Times, which wants to reach younger consumers who may not read traditional newspapers, has reached a deal to have Metro International carry some of its classifieds in its free daily New York edition. The deal covers classifieds for employment, real estate, automotive and merchandise. The two companies will share revenues, but financial details were not disclosed. The two publications have a combined readership on weekdays of 2.2 million in the New York area, the Times said.

The Times points out that the difference in readership between the two publications appears to be more in terms of reading habits than demographics. The average age of readers of Metro New York is 36 and their household income is $87,000. The Times average age was 43.7 with a household income of $88,500.

Nashville free daily hires new publisher

Nashville's free daily, The City Paper, announced Friday (June 2) that it has hired the publisher of that town's alt-weekly as its publisher. Albie Del Favero, 52, who has been with the Nashville Scene for 17 years, starts Monday at The City Paper. Interim Publisher Jim Ezzell -- CFO of Thompson Machinery Commerce Corp., one of The City Paper's shareholders -- led the free daily for the last 23 months while owners hunted for a new publisher. The City Paper was founded Nov. 1, 2000 by local businessman Brian Brown, who stepped down as publisher on March 2, 2004. A replacement, Tom Larimer, lasted about six months. Then Ezzell stepped in as interim publisher.

“Free circulation daily newspapers and their Web sites are the future of print journalism and the daily newspaper industry,” Del Favero said. “The City Paper has been ahead of the curve since it was founded, but now is in the right place at the right time to become one of the next major success stories in American newspapers.”

Said Clint Brewer, The City Paper's executive editor: “Albie’s track record speaks for itself. He understands the importance of quality journalism to a community, and I look forward to working with him to make The City Paper Nashville’s true daily newspaper.”

• Wikipedia entry on The City Paper
• The City Paper's Web site

Weekly in British Columbia to open free daily

The 99-year-old weekly newspaper in the British Columbia ski resort of Smithers, The Interior News, is opening a free daily newspaper on Monday (June 5), to be called The Northern Daily. "The Northern Daily distribution will be targeted, saturating the business district and made available at coffee shops, restaurants, major food outlets and other high traffic areas," said a story appearing in the Interior News. While the weekly Interior News contains only locally-generated copy, the new Northern Daily will use both local copy and stories from Reuters.

Free dailies can be found in all of the large Colorado ski resort towns. In the case of Vail, the weekly paper was unable to compete with the daily that started in 1984. Last year the weekly Vail Trail was sold to the owners of the Vail Daily, Swift Newspapers. In Aspen, a free daily began there in 1979, and for a while it began cut into the business of the successful Aspen Times weekly. In 1989, an employee from the Aspen Daily News, Dave Price, jumped to the Aspen Times and created a daily newspaper. For many years, The Aspen Times had both a weekly and daily edition, and the daily edition grew larger than the incumbent Aspen Daily News. In Steamboat Springs, Colo., the owner of the weekly, seeing what had happened in Aspen and Vail, started his own daily.