Death knell for door to door?

Much has been said in recent months about the future of the UK’s paid-for newspaper industry following the newspaper launches in London last summer. Following the appearance of City AM, London Lite and TheLondonPaper, many commentators and industry experts have been keen to deliver their predictions for the future. Some say that this is the beginning of the end for quality journalism, others say that this innovation will be the saviour of the newspaper industry, at least in the short term.

Much of the talk has been about the impact on the evening paid-for market and whether others will follow the example set by the Manchester Evening News and convert their paid-for offering to a free, at least in parts. But what does the future hold for the free, home-delivered newspaper and how will these new, bulk distributed titles affect the 700 or so free titles already in circulation?

Over the next two years, it is inevitable that we will see a huge change in the way in which the newspaper industry operates. Let us imagine that regional publishers, driven by a desire to retain advertisers in the face of falling circulations, will begin to phase in free editions of their evening paid-for titles. At the same time, let us assume that the national publishers, sensing a weakness in the regional market will consider a roll-out of their new titles, which have already been well received in the capital city by readers and advertisers alike. It is reasonable to assume that the market will develop in this respect, but an unfortunate side effect is that this strategy will blur the characteristics that differentiate conventional paid-for titles from free newspapers, which could sound the death knell for many publications.

The traditional propositions

Traditionally, free newspapers have traded on the basis that they offer high penetration in a specific geographical area at very little cost. They can do this because the advertising quotas are usually very high, therefore the production costs can be kept to a minimum. Despite the poor content and often inconsistent distribution levels, free newspapers have flourished over the years because they offer terrific value for money. Evening paid-for titles, on the other hand, tend to invest heavily in editorial content, offer greater frequency and, because their readers have paid for the privilege of taking that paper, they claim to offer a loyal, trusting audience and can justify charging more for advertising space.

With different propositions, the two types of newspaper have operated successfully in the same geographical areas, often published by the same companies. In many cases, the free newspaper has been well used as a barrier to protect the advances of opposing titles and to squeeze every last penny out advertising budgets by up-weighting the reach of the paid-for title. Consider though, the impact on the free newspaper when its long term ally, the local evening, suddenly takes on a new identity?

New model for evening papers

If the traditional evening newspaper becomes widely available as a free title, it will continue to hold its appeal for existing readers but it will also attract a new audience because it will be easy and convenient to access. Virtually overnight it will attain the readership levels usually reserved for a free, home delivered newspaper because of its ability to secure a captive audience during the commute to and from work. Add to this the fact that copies are likely to be made available from static distribution points such as supermarkets and shopping destinations, then the new ‘at no cost’ newspapers will be able to reach a wider demographic in addition to the important 18-34 consumer delivered by the core distribution method. These new titles will also retain their ability to offer advertising frequency because the majority of readers will follow the same daily routine and be exposed to the titles as a result.

In an attempt to replace their paid-for predecessors, these new complimentary titles are likely to retain a penchant for quality journalism and editorial integrity which will also put them at a distinct advantage over the traditional home-delivered, free newspaper. If the examples set out in London and Manchester are anything to go by, the ‘at no cost’ titles will have genuine readability, a distinct editorial personality and they are likely to campaign on local or regional issues.

It’s fair to say that they will carry with them all the strengths of the paid-for titles but none of the weaknesses. At the same time, they will adopt the benefits offered by traditional free newspapers, namely reach and penetration. This combination will make for a powerful advertising proposition, but how will the home delivered free paper fare under these circumstances?

With its ability to claim superior household penetration diluted, the home delivered free newspaper’s future will rest heavily on price. If it is to continue to attract advertisers, it must offer superior value, so much will rest on the rates charged by the new titles. Publishers and their respective sales teams will undoubtedly fight hard to position the new ‘at no cost’ titles in such a way that they can command higher rates on the basis of increased reach and interest in their product. However, advertisers can be notoriously sceptical, even about a sure thing. If publishers resort to incentives to entice advertisers into the new complimentary titles, it will be difficult to push the advertising rates back up again, certainly in the short term. This approach will only narrow the gap between home delivered frees and the ‘at no cost’ titles, and without a clear distinction, advertisers will be reluctant to place business in both types of paper.

If you’ve been to London or Manchester lately, or have travelled in a city which currently has a Metro newspaper, it’s difficult not to be impressed by the sight of so many people reading a bulk distributed paper. For many local advertisers, seeing is believing and this imposing presence will be another thorn in the side of the home delivered free title which cannot obtain this level of exposure.

The leaflets factor

The only other benefit that a free home delivered newspaper has over the ‘at no cost’ concept is the ability to carry an advertising message into the home. The vast distribution network acts as a conduit for advertisers who use leaflets to communicate their products and services. If a free newspaper generates £1 million in advertising, it probably does between 15% and 20% again in leaflet sales. This is a valuable revenue stream which could not be adopted by the ‘at no cost’ titles because of their alternative distribution method. However, the door to door delivery channels are effectively underwritten by the free newspaper, so whether publishers can maintain these in the face of falling advertising revenues is another matter.

Certainly there are other factors that will affect the success of the ‘at no cost’ newspaper, not least effective distribution, but the argument for them is very strong. The home delivered free still has its place, but whether it will survive in its current form remains to be seen.

While this is a fairly simplistic view of the future it follows a logical path. It is interesting to consider that it may be the industry itself that, while attempting to salvage something from the paid-for evening marketplace, will be responsible for the death of the traditional free-newspaper.