Free Papers, Healthy Profits   

Will the Village Voice and Palo Alto Daily News flourish by giving it away?

You don't get something for nothing. Free legal advice is worth what you pay for it. And a free newspaper is a throwaway.

Like most old saws, these contain elements of truth. Yet who has not received something that they valued without having to pay for it? A couple of times I have received free legal advice that turned out to be worth a lot. And clearly, many free newspapers these days are worth more than you pay for them.

It all comes down to content – if the publication contains useful and interesting material, it is valuable regardless of whether you have to pay for it. Indeed, this is the foundation of the free newspapers that have proliferated in suburbs and cities alike.

What brings this subject to mind is the recent decision by the Village Voice in New York City, previously a wholly paid weekly, to begin free distribution in Manhattan (outer-borough circulation remains paid) and the creation of a new free daily in California, the Palo Alto Daily News.

The strength of a paid circulation newspaper, of course, lies in the assumption of advertisers that subscribers must be reading it and seeing their advertisements. If people weren't reading the paper, presumably they'd stop buying it.

A free paper has a more difficult job in persuading potential advertisers that it has value to readers and that its advertisements get results. This is particularly true when the free paper is distributed via piles at delis, movie houses, restaurants and other public places, or in newsracks.

Absent other evidence, an advertiser might think a free paper distributed this way is nothing but a handy source of kitty litter and fire starters. The New York Times, in writing about the Village Voice's free distribution, repeated a rumor that homeless people in Manhattan were hauling "heaps" of free Voices to the outer boroughs, where the Voice still costs $1.25.

How can a free paper counter advertiser skepticism? Perhaps the best way is through consumer sales – responses to specific advertised items in the free paper. And a free paper can fund readership surveys, although the results are often viewed with suspicion. I've never seen a readership survey paid for by any kind of paper that was not laudatory.

The notion that a free newspaper is a throwaway dies hard, though, despite the success of many companies that produce them. Since these companies usually are private and do not release financial data, success means staying in business for an extended time. However, I have seen the books of enough of these companies to know it is possible to prosper by publishing free newspapers.

Still, the idea that a free paper is worthwhile can be a hard sell for some tradition-minded media companies. Several years ago a major non-newspaper media company hired me to advise on how a successful paid circulation weekly newspaper could be established in Washington, D.C. The goal was to provide a conservative alternative to the Washington Post.

After much study, I advised the company that it probably would be impossible to establish a financially viable paid circulation weekly in Washington, and that if such a paper ever turned a profit it would be 10 to 15 years away. The financial burden of creating a good, attractive newspaper and, above all, obtaining enough subscribers to interest advertisers, ruled out financial success for a long time, if not forever.

Instead, I advised, the company should design a distinctive-looking paper (I suggested the classic look of the old Emporia Gazette in Kansas as a model), hire first-rate and well-known journalists, and then mail the paper every week for free to the richest 200,000 homes in the market. I suggested that credit card-holders of Bloomingdale's, Saks, American Express and others of that ilk would be perfect targets.

The distinctive look and high quality of the editorial product would assure readership, and guaranteed delivery to every affluent home in metropolitan Washington would immediately attract the advertising dollars of every high-ticket retailer in the market. I was not wholly convinced this approach would succeed against the overwhelming dominance of the Post, but at least it had a chance.

I might as well have suggested that the company's president dance naked down Pennsylvania Avenue. "You mean publish a throw-away?" was the response. The company then had its own planning staff explore the launch of a paid paper. It came to the same conclusion I did, and the proposed alternative to the Post never got off the ground.

It remains to be seen whether free distribution in Manhattan will give the Village Voice a financial boost or whether the Palo Alto Daily News – as far as I know the only free daily in the nation – will thrive. But free newspapers remain a big part of the newspaper business.

According to the Gale Directory of Publications, there were 1,519 of them in 1995. That's a lot for a throwaway business. l