No sooner do I flit over to Spain than the 2008 action begins on the free newspaper front. Ryan covered the news up to Friday excellently well in his recent blog. However we can’t let Peter Preston get away with his Observer column today without a riposte.

Peter’s sagacity is great, so he will command respect when he says, as he does today, that the current cannibalisation of the British newspaper industry by the free papers Metro, London Lite and The London Paper is stupid. He believes that Associated loses more money on Lite and The Standard than it makes on Metro and also that News International is leaking revenue on The Sun partly because of The London Paper, without which we very probably would not have a London Lite. In other words, can all three of them! Then two great newspaper companies a) save a ton of cost and b) see The Sun and The Standard making better (or at least some) profits.

Here are some reasons why I think he is wrong.

1. He seems to be saying ‘let the competition cease’ so that two great newspaper companies can make even more money. With 2007 profits at DMGT of £322m and at 2007 operating income at Newscorp of $4.45 billion there seems no reason to discourage competition.
2. Despite fashionable disdain, people like London Lite, The London Paper and Metro. You can’t remove papers that more than 3 million people a day read. If you did other papers would immediately spring up in their place. Each and every one has a bigger circulation than the Observer, P. Preston’s paper. The Observer has been at it since December 1st 1791 and makes a loss. Metro has been going for a mere nine years this March and is not only handsomely profitable but the fourth biggest daily paper in Britain - an amazing achievement.
3. Advertising revenue, which supports the frees of course, may be looking thin at the start of 2008. But the weakness is in classified which is migrating to the web. National newspaper display advertising has been far stronger - up by around 6% year on year in the (admittedly not super-recent) latest available figures from the Advertising Association. And what looks thin today will look very different when the cycle starts to recover again.
4. Britain has the lowest penetration of free papers of any major economy in Europe except Germany, which hints at the general direction that things will go in print over the next 10 years.

Free papers are here to stay, make no mistake. They won’t disappear just to make life easier for their paid-for cousins. Publishers who are prepared to lose money on them in the short term because they see a strong future for them in the long term are surely right.

Entry Filed under: Newspapers