The one remaining bright spot in the newspaper industry, free papers are now struggling in a stagnant economy.

From the New York Times

Another bubble has burst. Instead of dot-com stocks or debt securities, this one involves a very different kind of paper, the free newspaper.

Starting in Stockholm in 1995 with a daily called Metro, free newspapers spread to cities around the world, providing the embattled print media business a rare growth story. By last year, daily circulation of free papers had climbed above 40 million worldwide, according to Piet Bakker, a professor in Amsterdam who tracks the business. In some countries, like Spain, more people were reading freebies than papers they had to pay for.

Since the economic crisis deepened last autumn, however, the free newspaper business has gone into free fall. Circulation in Europe, which accounts for more than two-thirds of the global total, has fallen by more than 10 percent, Mr. Bakker said, and dozens of titles have closed.

“It looks a little bit like high noon,” Mr. Bakker said.

While paid-for newspapers are suffering, too, free newspapers have been hit even harder by the economic downturn because they rely entirely on advertising, which is more volatile than revenue from newsstand sales and subscriptions. Analysts say ad revenue at many free newspapers has fallen by more than a third in recent months, compared with a year earlier.

In response, publishers of free papers are cutting costs and consolidating. Metro International, which expanded from Stockholm to more than 100 cities around the world, last month agreed to sell its newspapers in Philadelphia and New York, as well as a 51 percent stake in a Boston paper. (The other 49 percent of Metro Boston is owned by The New York Times Co., publisher of the International Herald Tribune.)

Metro International also said it was seeking a buyer for its operations in Italy and Portugal. Previously, it had pulled out of Spain, a country where “freesheets” had been flourishing, until too many of them appeared on the scene.

“When competition arrives, it’s very important to stay No. 1 or 2,” said Anders Kronborg, chief financial officer of Metro International. “If you’re not No. 1 or 2, get out.”

Few markets can support more than one or two freesheets, analysts say, because these papers generally reach very similar audiences — largely young, urban commuters. Advertisers prefer to buy space in the largest one in a particular city, leaving the rest to fight over a shrinking revenue pool.

In D.C. The Washington Post distributes The Express free to thousands of commuters who ride the area’s Metro subway system.  The paper which is chock full of ads largely carries news from the Post making me wonder why anyone who just wants a quick update on the news would bother paying for a copy of the Post.  More original reporting is available in D.C. with the Politico and the Examiner but they are mainly online publications with a very limited free distribution which is probably more economical in the long run.

 

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