Global Economics

A Newspaper Free-for-all Looms in London


On Sept. 4, an army of 700 purple-clad workers took to the streets of London armed with the latest offering from Rupert Murdoch's News International: a free afternoon newspaper called thelondonpaper. The aggressive launch marked the start of a fierce battle between Britain's two newspaper giants, News International (NWS) and Associated Newspapers, whose rival freesheet London Lite debuted Aug. 30.

Both players reckon they have spotted a big and potentially lucrative gap in the market: Under-35, affluent urbanites who are shunning traditional paid newspapers in favor of the Internet. With print runs of 400,000 each, both are going after a niche advertisers covet but find hard to reach. "We aim to attract a key target audience for our advertisers," said Ian Clark, the general manager overseeing the launch of thelondonpaper for News International Free Newspapers, in a statement.

Free newspapers are taking off worldwide. Paris has two—with a third set to launch this month. Barcelona has four, Madrid has five, and there are already several in the U.S., including Metro New York, published by Sweden's Metro International. With the circulation of paid-for mastheads plummeting worldwide, newspaper groups see freesheets as a way of reaching new readers while offering advertisers access to a tightly focused and previously hard to reach market.

JOURNALISM LITE. These young urban commuters, both newspaper groups say, are looking for a quick and entertaining read, as opposed to lengthy articles on serious topics such as politics and finance. As a result, both new London papers are heavy on entertainment news, gossip, and London-specific content. Articles are short and the tone is breezy.

This will be the first time Murdoch has launched a newspaper in Britain. His existing for-fee titles, the London Times, Sunday Times, and more downmarket Sun and News of the World, were acquired through takeovers. If successful, Murdoch is expected to roll out a national freesheet across Britain. News International has registered domain names for TheEdinburghPaper, TheGlasgowPaper, and equivalents for Birmingham, Manchester, Liverpool, and Cardiff. Murdoch already owns a free afternoon paper called mX distributed in Sydney and Melbourne.

Rival Associated owns Britain's most successful freesheet, the morning paper Metro (unrelated to the 70 daily Metro papers published by Metro International), as well as the Evening Standard, a paid-for evening paper. Both players have experience and more importantly, deep pockets. But success isn't assured. "Both are fighting for a share of the same cake," says Steve Goodman, managing director of print trading for WPP's Group M in London, which coordinates all WPP agencies' media buying.

BLOODBATH PREDICTED. Indeed, London already is one of the most competitive newspapers markets in the world. In addition to 11 daily British paid newspapers, there are now four free titles. Observers are already predicting a shakeout. "There are too many papers around for anyone to make a decent amount of money," says Jim Wessenden, managing director of Wessenden Marketing, an independent media consultancy in London. "This will be a bloodbath."

It may be too early to judge, but some of the young Londoners at which the publications are aimed aren't overly impressed. "I've got both the free papers to see if I'll like any of them, but I don't think I do," says John Lambert, a 27-year-old investment banker in London. "They're free for a reason." Outside of Tottenham Court Road tube station Amelia Myer, a 24 year-old accounts director from London, is also critical of the tabloid-style, celebrity-driven, debut issues. "I'd read it, but it would have to be handed to me; I'd be too embarrassed to pick it up."

The newspaper giants aren't deterred. The move toward free distribution in Britain is inspired by the success of Associated's Metro. While circulation of national morning newspapers has fallen 2.3% since February, distribution of Metro has risen 10%. Since launching in 1999, Metro now boasts a readership of 1.9 million across Britain and is on track to post a profit of $19 million this year. The other existing freebie, one-year-old City AM, a morning business paper, has seen its circulation jump more than 20% over the past six months to 88,000 and is expected to become profitable this year.

NOT ENOUGH READERS? Both Metro and City AM have proved that it is possible for advertisers to reach affluent young urbanites with a newspaper, as long as they don't charge for it. "Free seems to be the only way of getting the younger, Internet-savvy generation to read papers," says Wessenden, "But the real conundrum is that to date there is no evidence that people who are accustomed to free papers will ever convert to paid."

The more immediate question, however, is whether there is enough advertising revenue or readers to go around. The arrival of thelondonpaper and London Lite will present a big challenge to Associated's own paid-for evening newspaper, the Evening Standard, as each day, London will be flooded with more than one million copies of free and paid evening edition papers. Most media buyers believe 650,000 is a realistic London readership figure.

So far, media buyers welcome the new entrants, but "it will take time before advertisers see these new freesheets as a successful medium to advertise in," says Dan Pimm, head of press for media-buying agency Universal McCann in London. Piet Bakker, associate professor of communications at the University of Amsterdam agrees, saying, "Free newspapers need deep pockets and at least six months to get the readership data necessary to convince advertisers."

AD-SAVVY. Analysts say the new Murdoch freebie is particularly ad-savvy. The advertising and editorial departments sit together in open plan offices—anathema in the world of traditional papers—and both general manager Clark and editor Stefano Hatfield come from advertising backgrounds.

Hatfield launched Metro New York before going on to head U.S. publications for Metro International. Media buyers say he plans to offer all sorts of ad shapes and formats, from circles and triangles, to more complex cut-outs that will be allowed to bleed into editorial space, a practice unheard of at conventional newspapers. Group M's Goodman sees this as a big positive. "He will work closely with agencies and advertisers to make sure the products stand out, and he's open to promotional ideas using the paper's distributors perhaps to hand out samples," he says.

MOST TO LOSE. The launch of the new afternoon freebies comes at a time when sales of the capital's long-running (and only) paid-for evening paper, the Evening Standard, are falling. In the year to July, circulation declined 20% to just over 300,000 daily. In what is widely viewed as a defensive move to boost revenues and differentiate it from in-house rival London Lite, the Standard raised its price by 25% to 95 cents (50p) in advance of the freebie launch.

Analysts say Associated's strategy is to lure new, younger readers to London Lite, while upgrading the content of the Standard to attract a more upscale, older reader. However, many believe the Standard has the most to lose from the arrival of evening freesheets. Goodman reckons its circulation could fall by as much as 15%.

Still, News International and Associated claim that the new freesheets are unlikely to seriously erode sales of paid dailies. Instead, they believe the freebies will attract brand new readers, potentially revitalizing the entire newspaper industry. "It's a potential way of getting new readers," says Adrian Monck, head of journalism and publishing at City University in London. "But the break-even on these freesheets is years, not months."


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