Is The “Free” Ride Over? European Circulation of Freebies Declines

Philip M. Stone October 1, 2008

European circulation of free newspapers turned a milestone in September – it actually went down, not surprising, perhaps, since 23 free newspapers stopped publishing last year and 12 more have stopped this year, according to Dr. Piet Bakker, an expert on free newspapers.

Bakker, from Amsterdam University where he runs the Newspaper Innovation Web site, told a Madrid free newspaper conference this week that free newspapers are “extremely vulnerable to a recession” and those that are relying solely on advertising without being part of major publishing groups that can absorb losses and offer joint advertising proposals are going to suffer the most.

According to Bakker’s statistics, free newspaper circulation in Europe now stands at 27 million – that’s 300,000 less than at the end of 2007 and while it is not a big drop, it is a drop all the same.

Not that global circulation is down – he says it is up 2% because of South American and Asian launches – and today globally there are 230 free newspapers in 58 countries with a total daily circulation of 43 million. But Europe alone is responsible for 63% of the world’s free newspaper circulation with, Bakker says, 120 titles in 32 countries accounting for 23% of Europe’s newspaper circulation.

Perhaps the best example of what is going on in Europe is what happened with the Dutch DAG free newspaper that had a daily circulation of 380,000 built up over 18 months with publisher PCM (De Volksrant) and KPN Telecom behind it. But it was the fourth free newspaper with just a third of the readership of Metro, and behind Spits and De Pers and apparently the advertising market, where discounts were said to be huge, just couldn’t support everyone. Result: In September DAG died.

And take a look at the problems of Metro International, the world’s largest free newspaper publisher that is having a decidedly difficult time of it these days, perhaps one reason for the sudden departure Tuesday of its chief financial officer with the board wishing him “all the best for the future”.

Metro claims to have 20 million readers for its various free newspapers published in more than 154 cities in 20 countries, about 45% of total global free newspaper readership. But it’s not making money.

It reported a Q2 loss of €1.9 million compared to a €1 million gain for the same period a year ago, it has been busy closing losing operations – it’s Croatian franchise closed this month – and  for more than a year now it has been trying to offload its money-losing US publications in Philadelphia, New York and Boston.

To shore up the bottom line the company has completed the sale of a 35% stake in its Swedish subsidiary to Schibsted for €35 million and it sold 24.5% of metroXpress in Denmark to JP/Politiken in exchange for JP/Politiken’s 24 Timer newspaper transferring to the Metro Group. On the other hand it recently took its stake in its Mexican joint venture up to the legal limit of 49%.

In order to cut costs publishers that have both paid-for and free newspapers are looking for editorial ways to save money – more material from the paid paper showing up in the free and vice-versa. Ringier in Switzerland, for instance, has announced that in Zurich it is creating a single newsroom for all of its Blick titles – the daily Blick tabloid, The Sunday Blick, its free daily Blick newspaper and Blick online, so that when it is completed in 2010 every journalist will be contributing to at least two publications, and yes, there will be redundancies.

And in London perhaps the biggest free newspaper war in Europe is still going strong but only because both publishers involved have really deep pockets and neither has yet blinked. Rupert Murdoch’s thelondonpaper is distributing 500,000 issues every afternoon and Associated Newspapers’ London Lite is distributing around 400,000. So it is probably little surprise that Associated’s paid-for Evening Standard is really feeling the brunt and the only way it has kept its numbers at a somewhat decent level of 279,000 is via about 45% of its sales being bulk to hotels, airlines and the like.

Neither free evening newspaper has given financials, but it is generally accepted that both have blown in the tens of millions of pounds and no one is really talking about the advertising discounts going on with each company’s paid-fors offering joint deals.

In the AM market, incidentally, Associated distributes various Metro editions (not affiliated with Metro International) throughout the UK with total daily circulation of 1.35 million.

But overall, the bleakness of the future of free newspapers was perhaps best summed up at the Madrid meeting, the first devoted to free newspapers, by Martinez-Vallvey, communications professor at Spain’s Salamanca University, “We are going through a period of crisis, and the days to come are black!”