Going Local   

A new breed of free papers springs up in cities with already-established dailies.

A while back in this space (January/February), in writing about the prospects for free dailies, I asserted that their key to success was targeting prosperous readerships in communities, generally small, without significant competition. So much for my prescience.

We now have free dailies either under way or about to be in Nashville and Portland, Maine, as well as a free paper published twice a week in Portland, Oregon. It is far too early to declare any of these ventures a financial success, but it is worthwhile examining the market forces and strategies that have fueled these creations.

Free weeklies have become commonplace but are usually oriented toward suburban communities. Those aimed at the core population of cities tend to be of an alternative cast, like the Village Voice in New York City, or "subway" papers like Philadelphia's Metro.

But presumably successful (because they are still in business) free dailies of general interest--devoted to covering news rather than alternative points of view--have tended to turn up in places like Palo Alto, California; Vail and Aspen, Colorado; and Berlin, New Hampshire. These markets have either high-income residents or large numbers of wealthy tourists and little print competition.

What is different about Nashville and the Portlands is that these free papers are aimed at core markets already served by prosperous and dominant paid daily newspapers.

It has long been a given in the newspaper business that it is impossible to start up a new daily in a market that has an established daily. But the axiom assumes that the startup would seek paid circulation. Inevitably, the new paper is never able to sell enough papers to compete successfully for advertisers and eventually runs out of money.

One partial exception took place in Anchorage, Alaska, when McClatchy, which has deep pockets, took over the moribund Daily News in 1979 after its joint operating agreement with the dominant Anchorage Times expired. After several years and tens of millions in losses, McClatchy's Daily News overtook the Times, which folded in 1992.

Why do backers of the new free dailies in cities with established paid newspapers think they can succeed? The answer lies, I think, in modest expectations and a determination not to compete across the board. Instead, they concentrate on intensely local news coverage often eschewed by the established newspapers. By that I mean covering neighborhood council meetings, school board meetings, zoning hearings, individual school events, bus schedules and all the other stuff that is of interest even to residents of large cities. Most city dailies, with responsibilities for suburban, regional and state coverage, do not often go down that deep into city life.

Moreover, these new free dailies likely are counting on advertising support from retailers, usually locally owned small businesses, that have been priced out of the large circulation of the established papers. The theory is that with modest staff expenses (Nashville's City Paper has 27 news staffers compared with the Tennessean's 200) and a narrow focus on news coverage, even modest advertising revenue will be sufficient to pay the bills.

One way free papers ordinarily save on costs is to distribute primarily through news racks and pickup points at retail establishments. Home delivery systems are a major expense and headache for paid newspapers.

Nashville's City Paper does offer home delivery for $10 a month, but most of its distribution is through news racks and pickup points. The Morning Sun in Portland, Maine, which launched in September, will have no home delivery. The twice-weekly Portland Tribune in Oregon contracts out home delivery for 120,000 of its distribution and relies on news racks for 37,000.

However distributed, though, the main obstacle free papers have in competing for advertisers is that they are free. We are long past the time when free papers were equated with "throwaways," a handy source of fire starters. But the enduring strength of paid dailies is their audited, paid circulation. Advertisers are confident that a paid paper's buyers actually read the paper, or else they would not buy it. They can't be as sure about free papers. But this might be of lesser moment for the kinds of small advertisers that free papers attract with their relatively low advertising rates.

Whether the combination of modest ambitions and costs will make these free papers financially viable remains to be seen. But the entrepreneurial spirit that launched them is reassuring in this era of declining readership. Who knows? These new papers may even push the established dailies into doing a more complete job on local news.