It is a rare thing to hear any industry talk up its own demise, but that is exactly what newspapers seem to be hell-bent on doing. The gusto with which commentators are analysing the decline in sales is a sight to behold.
However, while print readership figures are not quite as dire as some would have us believe, there is a shift in the market, as free content becomes more commonplace. From paid-for newspapers' online editorial, to the jostling of street distributors outside train stations, free content has never been more prolific or easier to get hold of.
A London commuter now has the opportunity to read four free daily newspapers (City AM, Metro, thelondonpaper and London Lite), and two weekly men's magazines (Sport and ShortList). For female travellers, River Publishing started distributing Dare, its women's monthly magazine, as a free title from 20 February.
As commuters drown under the waves of free newsprint, there has been mounting speculation that a national will be tempted to shift to a free model. With the most recent newspaper ABC figures (Media Week, 12 February) showing further declines in readership, even the Financial Times speculated that a red-top such as The Sun or the Daily Mirror might take this route. Others have long pointed a finger at The Independent.
While the prospect of national papers going free makes for interesting speculation, this scenario is widely derided in the industry. It's one thing for a regional newspaper covering a limited geographic area to be free, but quite another to find a practical free distribution model on a national scale.
Steve Auckland, managing director at Associated Newspapers' free newspaper division, says: "There has been talk about a national newspaper going free. However, people still have to go into a shop to pick the paper up, so the publisher would have to pay a retailer to stock it."
He adds: "In the free market, the commute makes a big difference, so going free can be cost-effective in urban areas. But changing to a free model in rural areas would be a nightmare and too expensive to do."
Auckland claims there will always be paid-for papers, although he predicts they will separate further in the markets they serve. "Newspapers will polarise into their niches. There is particular scope in the older market: despite the rush for younger readers, the 50-plus market is growing."
Jens Torpe, chief executive of City AM, has experience of the free newspaper market in a number of countries. He's convinced that, in the long run, there will be a mix of free and paid-for titles, although he expects the proportion of free newspapers and their circulations to increase.
He says: "I launched the first free paper in Barcelona in March 2001 with 250,000 copies. A year ago, more than 50% of Spanish newspapers were free; similarly, the first free paper in my native Denmark was launched in 2001, and now free and paid-for titles are about 50/50.
"Growth in free newspapers in the UK has not been so fast, but the total circulation of nationals on a weekday is around 10 million, of which around 2.5 million are free. In five years' time, this could be nearer 50/50."
Countering the talk of a national opting to go free, Torpe adds: "There is no country where a paid-for title has gone free, even in the face of declining circulations. Free papers are more likely to come from new launches."
However, in Manchester, the Manchester Evening News has gone for a hybrid model: the paper is free in the city centre and paid-for further out (see box, right). While Associated's Auckland thinks others will follow its lead and MEN Media's managing director Mark Rix points to sharp rises in circulation and ad revenue since the strategy was introduced, others are unconvinced.
Andrew Mullins, managing director of the Evening Standard, says: "The MEN's hybrid model is insanity; it would never work for us. It would destroy our business model overnight and it is grossly unfair."
Nevertheless, the Standard does give away a third of its claimed ABC on trains and planes, and has had to address the fact that even momentary delays caused by buying a paper can impact sales. Its strategy has been to focus on speeding up the purchasing process with its Eros "tap and go" system (see box on page 28).
Claudine Collins, managing partner and head of press at MediaCom, says: "Distribution is one area where the newspaper industry hasn't radically changed, with the exception of Metro.
"Everybody rushes around and nobody has time to do anything that isn't convenient. Publishers must ensure that papers are convenient for consumers to pick up and that the payment method is simple. So I applaud innovations such as the Eros card that make it easier for consumers to pay."
Despite commuters' unwillingness to be waylaid, many British consumers remain loyal newspaper readers. The UK has a long tradition of newspapers and some of the strongest and most varied titles in the world.
Simon Marquis, National Readership Survey chairman, says: "It's part of our national character to be newspaper addicts and I don't see that falling away overnight. There clearly is a market and an appetite for free newspapers, particularly in London. But, equally, there is no possibility that paid-for nationals are threatened in the immediate term because of the development of free papers: the two are very different products."
Indeed, the NRS's research shows that people still spend a long time reading newspapers. At an average of 40 minutes for a weekday paper, rising to 70 minutes for a Sunday title, this medium is not one casually bought and thrown aside, but conscientiously devoured.
Furthermore, the paid-for titles incorporate free elements. All the national papers offer free online content, and they have operated their own form of giveaways for many years, under the guise of bulk sales.
A generation of younger readers may be growing up and turning to the internet as their first port of call for news, but much of the traffic on newspapers' websites is generated from the print side.
Collins says: "Recent findings by the Newspaper Marketing Agency suggest that newspapers drive 44% extra web traffic, generating more traffic than any other traditional media channel. So far, print publishers with online interests are benefiting from attracting a large pool of unique users. It is crucial for the industry to fully get to grips with who their readers are and the relationship they have with their media channels."
The free titles have shown that young urbanites are willing to read a newspaper if it is easy to get their hands on and they don't have to pay for it. But, while the audience attracted to the free papers is what many advertisers are looking for, there is little differentiation between the products.
One industry source says: "Metro, London Lite and thelondonpaper are run on a shoestring and they are not bad products, considering the restrictions they are under. But, if they were all that were available, it would be deeply depressing. All paid-for titles have another dimension to the freebies."
Dominic Williams, press director at Carat, was not initially convinced that free newspapers would work in the UK, but admits he has had to "eat his words". He says: "The free papers are a great advertising medium. Some products don't advertise in the free newspapers because they don't believe in them, but I think they are missing a trick."
He adds: "We can work with the editorial team and be creative and get standout, which we can't do so much with other papers. The only way that free papers can bring in revenue is through advertising, so they have to stand out from the competition by being creative and funky."
The fact that free newspapers' revenue streams rely entirely on advertising makes the titles vulnerable - despite the heady quantities handed out. The economics have yet to prove - with the exception of Metro - that they can turn a profit. Associated's Auckland predicts London Lite will break even in five years, but admits it requires deep pockets to go down the free route.
And what happens if there is a recession? Even now it is a scrabble for the advertising pounds. "Our media budgets aren't increasing just because new papers have launched," says Carat's Williams. "Newspapers are still delivering huge numbers daily, but it is a very tough market."
Amid the speculation that a national will give up its cover price for extra circulation, there is a counter argument. If the marketing principles of other sectors applied, there would be a case for charging more for a quality newspaper to more clearly position it as a premium product.
At half the price of the average cappuccino, but containing 40 minutes' worth of news, views and entertainment, could it be that the broadsheets, at least, are undercharging themselves?
MEN'S HYBRID MODEL
In May 2006, the MEN decided to distribute the paper free of charge in the city centre while still charging for it further out. MEN tested the concept with the launch of an MEN Lite edition the previous year.
Under pressure from declining sales, publisher MEN Media decided the shift was necessary to secure more younger and affluent readers.
MEN is now delivered to offices and newsagents, and is distributed by hand in the city centre. The newspaper has a circulation of around 180,000, compared to around 133,000 for the second half of 2005.
Newsagents were won over by the promise of continued, though reduced, distribution fees, and increased footfall in their shops. The part-free, part paid-for strategy has had immediate effects.
Mark Rix, managing director of MEN Media, says: "Our figures suggest that for the first year (May2006-May 2007), we have seen an 8% rise in national advertising revenue, and a 19% increase in readership." There has also been an increase in visitors to MEN Media's online network. It received 9.5 million page views last November, according to Google Analytics.
And the change in distribution has been marked. "Before the paper was free in the centre, we were selling 7,000 copies. We gave up that revenue overnight, but we now distribute 98,000 free copies Monday to Friday," says Rix. "We have engaged readers with a free product that is aesthetically pleasing, convenient to pick up, and has relevant content."
In a bid to attract younger male readers, MEN Media also struck a deal to give away men's weekly ShortList alongside the MEN on Thursdays.
Of course, there has inevitably been a decline in paid sales, and no doubt some disgruntled suburbanites. Rix says: "We fully explained our reasoning to readers. On the whole, they have been very understanding."
- Additional research by Julia Wray
STANDARD GOES CASHLESS
After years of ruling the London evening market, Associated Newspapers' Evening Standard has experienced the uncomfortable truth of the full onslaught of the London free papers.
Its fightback tactics have focused on making it as easy and convenient as possible for Londoners and commuters to buy a copy of the Standard. Any delay in having to rummage for change impacts sales.
To this end, the newspaper launched its Eros cashless payment card system last October. The "tap and go" technology reduces the amount of time spent on a transaction to a minimum.
Andrew Mullins, managing director of the Evening Standard, says: "Many commuters have got their time to the trains down to the minute. Eros is about removing barriers to purchasing and providing benefits."
The aim is to put 500 Eros card readers into zones 1-2 by the end of March. Mullins admits that the company is a little behind on installing terminals: only around 180 have been installed to date. Card distribution was initially through sampling at stations. However, most users now sign up online, with some prepaid cards available from vendors.
"Zone 1 is going cashless because of Oyster and 'tap and go', so we had to prepare for that," says Mullins. "We thought demand would be greater by now, but it just means we're in front on distribution."
The Eros card scheme, combined with a rebrand of vendors' street furniture, cost £8m, while £3m went towards promoting the strapline "Know What London's Thinking." Despite competition from London's free papers, Mullins has no intention of removing the price tag from the paper he describes as "cashless, but not free."
- Additional research by Julia Wray.
However, while print readership figures are not quite as dire as some would have us believe, there is a shift in the market, as free content becomes more commonplace. From paid-for newspapers' online editorial, to the jostling of street distributors outside train stations, free content has never been more prolific or easier to get hold of.
A London commuter now has the opportunity to read four free daily newspapers (City AM, Metro, thelondonpaper and London Lite), and two weekly men's magazines (Sport and ShortList). For female travellers, River Publishing started distributing Dare, its women's monthly magazine, as a free title from 20 February.
As commuters drown under the waves of free newsprint, there has been mounting speculation that a national will be tempted to shift to a free model. With the most recent newspaper ABC figures (Media Week, 12 February) showing further declines in readership, even the Financial Times speculated that a red-top such as The Sun or the Daily Mirror might take this route. Others have long pointed a finger at The Independent.
While the prospect of national papers going free makes for interesting speculation, this scenario is widely derided in the industry. It's one thing for a regional newspaper covering a limited geographic area to be free, but quite another to find a practical free distribution model on a national scale.
Steve Auckland, managing director at Associated Newspapers' free newspaper division, says: "There has been talk about a national newspaper going free. However, people still have to go into a shop to pick the paper up, so the publisher would have to pay a retailer to stock it."
He adds: "In the free market, the commute makes a big difference, so going free can be cost-effective in urban areas. But changing to a free model in rural areas would be a nightmare and too expensive to do."
Auckland claims there will always be paid-for papers, although he predicts they will separate further in the markets they serve. "Newspapers will polarise into their niches. There is particular scope in the older market: despite the rush for younger readers, the 50-plus market is growing."
Jens Torpe, chief executive of City AM, has experience of the free newspaper market in a number of countries. He's convinced that, in the long run, there will be a mix of free and paid-for titles, although he expects the proportion of free newspapers and their circulations to increase.
He says: "I launched the first free paper in Barcelona in March 2001 with 250,000 copies. A year ago, more than 50% of Spanish newspapers were free; similarly, the first free paper in my native Denmark was launched in 2001, and now free and paid-for titles are about 50/50.
"Growth in free newspapers in the UK has not been so fast, but the total circulation of nationals on a weekday is around 10 million, of which around 2.5 million are free. In five years' time, this could be nearer 50/50."
Countering the talk of a national opting to go free, Torpe adds: "There is no country where a paid-for title has gone free, even in the face of declining circulations. Free papers are more likely to come from new launches."
However, in Manchester, the Manchester Evening News has gone for a hybrid model: the paper is free in the city centre and paid-for further out (see box, right). While Associated's Auckland thinks others will follow its lead and MEN Media's managing director Mark Rix points to sharp rises in circulation and ad revenue since the strategy was introduced, others are unconvinced.
Andrew Mullins, managing director of the Evening Standard, says: "The MEN's hybrid model is insanity; it would never work for us. It would destroy our business model overnight and it is grossly unfair."
Nevertheless, the Standard does give away a third of its claimed ABC on trains and planes, and has had to address the fact that even momentary delays caused by buying a paper can impact sales. Its strategy has been to focus on speeding up the purchasing process with its Eros "tap and go" system (see box on page 28).
Claudine Collins, managing partner and head of press at MediaCom, says: "Distribution is one area where the newspaper industry hasn't radically changed, with the exception of Metro.
"Everybody rushes around and nobody has time to do anything that isn't convenient. Publishers must ensure that papers are convenient for consumers to pick up and that the payment method is simple. So I applaud innovations such as the Eros card that make it easier for consumers to pay."
Despite commuters' unwillingness to be waylaid, many British consumers remain loyal newspaper readers. The UK has a long tradition of newspapers and some of the strongest and most varied titles in the world.
Simon Marquis, National Readership Survey chairman, says: "It's part of our national character to be newspaper addicts and I don't see that falling away overnight. There clearly is a market and an appetite for free newspapers, particularly in London. But, equally, there is no possibility that paid-for nationals are threatened in the immediate term because of the development of free papers: the two are very different products."
Indeed, the NRS's research shows that people still spend a long time reading newspapers. At an average of 40 minutes for a weekday paper, rising to 70 minutes for a Sunday title, this medium is not one casually bought and thrown aside, but conscientiously devoured.
Furthermore, the paid-for titles incorporate free elements. All the national papers offer free online content, and they have operated their own form of giveaways for many years, under the guise of bulk sales.
A generation of younger readers may be growing up and turning to the internet as their first port of call for news, but much of the traffic on newspapers' websites is generated from the print side.
Collins says: "Recent findings by the Newspaper Marketing Agency suggest that newspapers drive 44% extra web traffic, generating more traffic than any other traditional media channel. So far, print publishers with online interests are benefiting from attracting a large pool of unique users. It is crucial for the industry to fully get to grips with who their readers are and the relationship they have with their media channels."
The free titles have shown that young urbanites are willing to read a newspaper if it is easy to get their hands on and they don't have to pay for it. But, while the audience attracted to the free papers is what many advertisers are looking for, there is little differentiation between the products.
One industry source says: "Metro, London Lite and thelondonpaper are run on a shoestring and they are not bad products, considering the restrictions they are under. But, if they were all that were available, it would be deeply depressing. All paid-for titles have another dimension to the freebies."
Dominic Williams, press director at Carat, was not initially convinced that free newspapers would work in the UK, but admits he has had to "eat his words". He says: "The free papers are a great advertising medium. Some products don't advertise in the free newspapers because they don't believe in them, but I think they are missing a trick."
He adds: "We can work with the editorial team and be creative and get standout, which we can't do so much with other papers. The only way that free papers can bring in revenue is through advertising, so they have to stand out from the competition by being creative and funky."
The fact that free newspapers' revenue streams rely entirely on advertising makes the titles vulnerable - despite the heady quantities handed out. The economics have yet to prove - with the exception of Metro - that they can turn a profit. Associated's Auckland predicts London Lite will break even in five years, but admits it requires deep pockets to go down the free route.
And what happens if there is a recession? Even now it is a scrabble for the advertising pounds. "Our media budgets aren't increasing just because new papers have launched," says Carat's Williams. "Newspapers are still delivering huge numbers daily, but it is a very tough market."
Amid the speculation that a national will give up its cover price for extra circulation, there is a counter argument. If the marketing principles of other sectors applied, there would be a case for charging more for a quality newspaper to more clearly position it as a premium product.
At half the price of the average cappuccino, but containing 40 minutes' worth of news, views and entertainment, could it be that the broadsheets, at least, are undercharging themselves?
MEN'S HYBRID MODEL
In May 2006, the MEN decided to distribute the paper free of charge in the city centre while still charging for it further out. MEN tested the concept with the launch of an MEN Lite edition the previous year.
Under pressure from declining sales, publisher MEN Media decided the shift was necessary to secure more younger and affluent readers.
MEN is now delivered to offices and newsagents, and is distributed by hand in the city centre. The newspaper has a circulation of around 180,000, compared to around 133,000 for the second half of 2005.
Newsagents were won over by the promise of continued, though reduced, distribution fees, and increased footfall in their shops. The part-free, part paid-for strategy has had immediate effects.
Mark Rix, managing director of MEN Media, says: "Our figures suggest that for the first year (May2006-May 2007), we have seen an 8% rise in national advertising revenue, and a 19% increase in readership." There has also been an increase in visitors to MEN Media's online network. It received 9.5 million page views last November, according to Google Analytics.
And the change in distribution has been marked. "Before the paper was free in the centre, we were selling 7,000 copies. We gave up that revenue overnight, but we now distribute 98,000 free copies Monday to Friday," says Rix. "We have engaged readers with a free product that is aesthetically pleasing, convenient to pick up, and has relevant content."
In a bid to attract younger male readers, MEN Media also struck a deal to give away men's weekly ShortList alongside the MEN on Thursdays.
Of course, there has inevitably been a decline in paid sales, and no doubt some disgruntled suburbanites. Rix says: "We fully explained our reasoning to readers. On the whole, they have been very understanding."
- Additional research by Julia Wray
STANDARD GOES CASHLESS
After years of ruling the London evening market, Associated Newspapers' Evening Standard has experienced the uncomfortable truth of the full onslaught of the London free papers.
Its fightback tactics have focused on making it as easy and convenient as possible for Londoners and commuters to buy a copy of the Standard. Any delay in having to rummage for change impacts sales.
To this end, the newspaper launched its Eros cashless payment card system last October. The "tap and go" technology reduces the amount of time spent on a transaction to a minimum.
Andrew Mullins, managing director of the Evening Standard, says: "Many commuters have got their time to the trains down to the minute. Eros is about removing barriers to purchasing and providing benefits."
The aim is to put 500 Eros card readers into zones 1-2 by the end of March. Mullins admits that the company is a little behind on installing terminals: only around 180 have been installed to date. Card distribution was initially through sampling at stations. However, most users now sign up online, with some prepaid cards available from vendors.
"Zone 1 is going cashless because of Oyster and 'tap and go', so we had to prepare for that," says Mullins. "We thought demand would be greater by now, but it just means we're in front on distribution."
The Eros card scheme, combined with a rebrand of vendors' street furniture, cost £8m, while £3m went towards promoting the strapline "Know What London's Thinking." Despite competition from London's free papers, Mullins has no intention of removing the price tag from the paper he describes as "cashless, but not free."
- Additional research by Julia Wray.