The move for the Standard to go free from next Monday (12 October) is not without risk: it is thought to be sacrificing £15m annually in lost cover price income.
However, it is being viewed as a pre-emptive strike at its one time sister paper, Associated's London Lite, in a battle to be top dog in the afternoon London market.
Sources at Associated, a 24.9% shareholder in the Standard but crucially one with no boardroom representation, claims it was aware of the move before it was made public.
Steve Auckland, managing director of Associated's free newspaper division, said it was monitoring the situation, but declined to give further details.
The options for Lord Rothermere, controlling shareholder of Associated parent DMGT, appear limited. According to sources, Lebedev has no interest in diluting his shareholding in the paper and offering an olive branch in the shape of a merger between the Lite and Standard. In the background, the London Lite buys content from the Standard.
Lebedev, meanwhile, is banking on the Standard's expanded distribution being a hit with media agencies and advertisers, and has been quick to emphasise there will be no drop in editorial standards. Yet, the costs of upping its distribution from 250,000 in the short term will be huge and operations across the entire Standard business are under review as it looks to reap back some of the £15m per year lost in cover price revenue.
Paper costs are up 22% year on year, according to BLM, and a new distribution system has to be implemented, while the inevitable dilution of its core affluent, middle class readership could cause advertisers to look at taking their spend elsewhere.
Key facts about the free Standard...
• The paper will be hand distributed across Greater London, but is also exploring distribution deals with newsagents
• Will bolster its circulation from around 170,000 in London's travel Zone 1 to 450,000 copies
• No plans for an early morning issue. Distribution will start around 12.30pm on weekdays
• Distribution of weekly magazine ES will not be lifted to 600,000
• Eros Card, a reward card that can be used to buy the Standard and conferred benefits on its users, will be scrapped
• £15m - expected drop in annual cover price revenue
443,185
In July 2000, the paper's total circulation stood at 443,185, including bulks. This had fallen to 225,158 by July 2009
STANDARD GOING FREE What the industry has to say...
Gabrielle Rossetti, media manager, Arena BLM
It needed to do some-thing big as, from a media buyer's perspective, ad rates were being driven down anyway. And as 40% of its circulation was already bulks, this move makes massive sense. It will be interesting to see how its editorial changes as the free market is younger and many are now used to London Lite and thelondonpaper content. Overall, this is a good thing for newspapers.
Alan Brydon, head of press, MPG
From an advertiser point of view, if the Standard is going to provide the same quality of product, then it is fantastic. Ad rates are likely to go up, but I don't believe the Standard will say "you are getting three times more copies, so we want three times more money". Overall, even if we factor in that readers of free papers are generally less attentive than those who pay for them, this will be good value for clients, who will want to be in it.
Paul Thomas, Head of press, Mindshare
I expect the Standard will come to us with an ad rate increase. It depends on how it distributes it and how it is rolled out. Not to long ago, the Standard was selling 450,000 copies. If the quality of the audience is still an affluent, older market, then it will have no problem in keeping its advertising brands. But if it starts attracting a mass, younger, less affluent audience, then it could be a problem.
Andy Mullins, managing director, London Evening Standard
This is not a pre-emptive move aimed at closing the London Lite. This is about the Standard taking care of its own future. Mr Lebedev has been very generous with this move. I am not worried about high-end advertisers wanting to advertise in a free Standard - just look at cities like Milan, which have free newspapers featuring high-end advertisers.
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