Free tabs explode in urban markets

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The report card for free daily tabloid newspapers in the U.S. is decidedly mixed save for one key indicator: Their numbers keep growing.

The latest move brings the medium's biggest player into the nation's largest media market.

Sweden's Metro International, which mastered the form in European markets before introducing it to America, is significantly staffing up in the States in preparation for an expected May 5 launch in New York City.

Metro's arrival in the nation's largest media market is only a beginning for free dailies' push into prime time in America. Metro executives are eyeing expansion into San Francisco and Washington as well as beefing up editorial offerings in its extant Philadelphia and Boston editions.

Metro executives wouldn't comment on launch details, nor even confirm a New York edition is forthcoming. But individuals familiar with the plans say the initial launch in New York will see Metro distributing around 250,000 copies. The Tribune Co.-backed amNewYork just audited a circulation of about 209,000.

Free dailies have unfolded in several major U.S. markets including:

* Dallas, with Quick, a recently launched offering from Belo Corp.'s flagship, The Dallas Morning News. The free tabloid is vying with the independent A.M. Journal Express, which was started up by a former Morning News general manager.

* The District of Columbia, where The Washington Post puts out Express, competing with partially free county-based dailies being published by Journal Newspapers.

* Chicago, where the two major dailies are locked in a battle of the "Reds" as their fledgling alter egos struggle to make a transition from free distribution to a 25ยข price tag. The Tribune Co. and Hollinger International's Chicago Sun-Times launched Red Eye and Red Streak in late 2002, which puts them at the forefront of the recent wave of new entrants. (Metro launched in Philadelphia in 2000 and followed in Boston in 2001.)

* California, where The Press-Enterprise in Riverside County has launched a free sibling called simply the d. In San Francisco, the Examiner, once owned by Hearst Newspapers, is trying to survive as a free tabloid.

All this is gaining momentum despite the brutal notices that these edit products have garnered, and the fact that it's not hard to find advertisers who still sound unconvinced.

"It still has to find its own niche," Peter Krivkovich, president-CEO of Cramer-Krasselt, Chicago, says about Tribune Co.'s Red Eye. He notes the paper is squeezed by the snark of The Onion on one end and the gravitas of the Chicago Tribune on the other.

"I thought it would be better if they would take [the Tribune] and do something within that," Mr. Krivkovich says. "I am just not sure you need a stand-alone product."

In a conference call with investors last October, Tribune Co. Senior VP Donald C. Grenesko said Red Eye in 2003 and for 2004 would be in "a modest loss position" and that about 15% of its 80,000 circulation was paid. He followed his comments about Red Eye by-tellingly-speaking much more highly of Tribune's tabloid for the Hispanic market: "Hoy, on the other hand, is a real success story."

"They're an option," Dan Binder, media director at Chicago ad agency Two by Four, says of the Red papers there. "I don't think they're what they're touted to be."

COMMUTERS KEY FOCUS

In terms of editorial tilt, two models have emerged for the free dailies. The first is the "commuter" model, which is a wire-service-heavy news digest like the Metros and amNewYork (whose publisher launched the Boston edition of Metro).

The second is the hipster model, pioneered by Chicago's Reds, going for a bolder visual approach-this is a relative notion, however, as production values in all such papers are by no means lavish-and a sharper tone clearly aimed at twentysomethings. (Dallas' Quick takes a more hip-hop-inflected approach to this motif.)

Still, the contortions of a daily newspaper rejiggering its institutional tone to something approaching hipness is rarely a pretty sight, as Tribune's Red Eye still attests: One recent cover-line touted the town's "metrosexiest bars."

The clipped, ultrashort style prized by Metro-esque dailies often leaves the papers feeling as if they were hastily assembled with scissors and a pot of glue.

Those in charge insist that editorial evolution is ongoing. Red Eye is "unabashed about dumping content readers don't want," says General Manager John O'Loughlin. "We started with horoscopes and advice columns," but readers said "[expletive] get rid of them." In their place, Mr. O'Loughlin says, is now more celebrity news, and overall a much stronger focus on local doings.

Still, it should be noted that in a medium like this, editorial excellence is not the point. The idea is to be there when a consumer has a spare moment-be it in or around transit systems or at places where workers grab their morning coffee.

It's a similar model to Gannett Co.'s newly acquired Captivate network, which beams information at elevator riders or other passers-by in one-sentence "newslets." Multiply Captivate by the time it takes to grab a quick lunch, walk from point A to point B or ride the train for 15 minutes, and you have the editorial essence of the new free tabloids.

TECH MAKES IT POSSIBLE

What brought them into being, really, are ongoing technological advances. "Twenty-five years ago, to produce a daily newspaper you needed a lot of people," writes veteran newspaper consultant David Cole. "Now, you get a couple of guys who know how to use [QuarkXpress] and you can have pages come out on the other end."

Mr. Cole suggests one key to the explosion of free dailies: "It doesn't take much money to turn a profit."

Combine lower ad costs with marketers' ongoing concerns about reaching an ever-moving target (literally) of consumers conceded to be harder to reach via newspapers and other media. Then add in these dailies' stated goals of reaching those who don't read the daily paper, and you have a model that's won some over.

"It's a vehicle that fills a void in the marketplace that wasn't there 10 or 15 years ago," says Al Samuelian, VP at Interpublic Group of Cos.' Hill, Holliday, Connors, Cosmopulos, Boston. In the past he has used both the Boston and Philadelphia Metros for financial services giant FleetBoston Financial.

Ad dollars are a zero-sum game as marketers' continue to hold tight to their purse strings, and it remains slightly unclear as to where free dailies' dollars come from. But certainly their rates are gentle enough to attract the kinds of local merchants who are priced out of the big dailies.

In cities with free dailies hewing to the hipster model, the risk of losing ads is borne by local alternative weeklies, and at least one confesses to feeling a pinch.

"We haven't lost [advertisers]," says Jane Levine, exec VP of the alternative weekly Chicago Reader, "but there are people who've shaved their size a little bit."

Ms. Levine says she can't be sure whether that's attributable to the Red dailies or the entrance of The Onion, a humor weekly.

Red Eye at times bulks up its pages with house ads for Red Eye and the Tribune-roughly 25% of its ad linage in its March 30 edition-but it has also attracted the likes of Chicago live-music venue Metro, which was formerly only sighted in the alternative weeklies.

Mr. Grenesko, in last fall's conference call, said Red Eye had brought in 250 local advertisers who'd never used the Tribune before.

There's also the diffusely defined advertiser target that the free dailies aim for. "Metro competes for advertising that is both classical newspaper advertising [like electronics, technology and automotive] and also from advertisers who have abandoned print or daily newspapers for TV and radio" and even outdoor, says Steve Nylund, exec VP at Metro International.

It's hard to see ad falloffs at other media in the numbers, be it at the paid daily newspapers or local radio stations, owing to the broadly felt advertising malaise that still hangs over the media business.

Circulation effects where free dailies launch are also hard to determine. Monday-through-Friday circulation figures for Philadelphia's two paid dailies-the Inquirer and Daily News, both owned by Knight Ridder- show declines of 6.0% and 6.8%, respectively, from 2000 (when Metro was introduced) to 2003.

This is a slightly larger decline than suffered by many roughly comparable major metro papers, but there's so much variance in individual markets that it's hard to form firm conclusions.

The free papers claim to target non-newspaper readers. In Dallas, A.M. Journal Express' audience is "very similar to a morning drive-time audience," says Jeremy Halbreich, chairman-CEO of American Consolidated Media, which publishes that free daily.

The free dailies are gaining a tenuous foothold in America, but the real test comes in a year or so, when it's known whether the latest bets in this space have panned out.

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