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Free papers' growth threatens traditional news

'Micro-dailies' excel at efficiency, but the competition could displace experienced journalists

By Michael Stoll
Posted Oct. 13, 2005

The price is right: A hawker gives away hundreds of San Francisco Examiners at a BART station, yelling "Paper! Free!"

Ideally, the free daily tabloids that are popping up in the Bay Area and elsewhere like mushrooms after a rain would complement rather than substitute for relatively high-quality paid newspapers like the San Francisco Chronicle and San Jose Mercury News.

Commuters and shoppers would pick up the free daily tabs to learn what the city council was up to, and still subscribe to a broadsheet for regional and world news. Young people would enjoy the brevity of the free papers, then "graduate" to more substantive broadsheets. People who won't pay to read would still be informed. Print journalism would flourish, providing new entry-level jobs at the free tabs -- without diminishing the workforce of broadsheet journalists who have deep knowledge of the community.

That was the hope. The reality appears to be shaping up differently. While the free papers have delivered on their promise to increase awareness of hometown issues ignored by the metro press and local TV newscasts, they also are replacing the paid dailies in some people’s lives.

The result so far has been the spread of an abbreviated, underfinanced "news lite," adding to the woes of paid papers that have supplied the in-depth, public-service reporting that Americans have come to expect from print.

"Free dailies are adding themselves to a world in which free news online was already training people that you can get news for free," said Geneva Overholser, a professor at the University of Missouri School of Journalism and a former Washington Post ombudswoman. "I think it's a dicey environment for news organizations that are paying people and training people to produce good journalism."

Free papers replacing paid

In the Bay Area and nationally, fewer readers are willing to pay for a daily newspaper than five years ago. Advertisers small and large are less willing to support them -- to the tune of tens of millions of dollars each year for the largest papers. As a consequence, the Bay Area’s biggest and best papers have shed pages, readers and hundreds of journalists earning middle-class wages.

The free dailies, on the other hand, are proliferating and adding editions by hiring smaller teams of less experienced reporters. The free papers in the Bay Area also demand more stories per day from reporters and eschew unions. The workload, anywhere between one and six stories daily, makes quality and context difficult to achieve, and investigative stories almost impossible. The pared-down reporting that results lacks context and sometimes a solid grip on the facts, a Grade the News analysis has shown.

Paid newspaper penetration (circulation per household) has been declining for decades, but has accelerated in the last five years. Radio, television and, more recently, the Internet, provide alternatives to buying a newspaper. Free papers are now adding to paid papers' circulation woes by offering a close substitute.

The potential for us to get people who don't regularly read newspapers is huge, maybe 70 percent of the population.

-- Dave Price, co-publisher, the Daily News group

In a 2002 report to members of the International Newspaper Marketing Association, "Threats and Opportunities of Free Newspapers," Carly L. Price wrote that free papers are "potentially lethal" to the business model of paid papers: "Multiple targeted newspaper products that are free could slowly chisel away at the number of customers willing to pay for their news every day."

Clear pattern in Bay Area

Five years ago the morning Chronicle had a daily competitor that also cost 25 cents: the afternoon San Francisco Examiner. Now, after the staffs merged and a new owner bought the Examiner name, the Chronicle's weekday circulation fluctuates between 450,000 and 490,000 daily copies -- about where it was before it absorbed a paper that printed about 100,000 copies.

The Chronicle doesn't count the old Examiner circulation, even though the merger temporarily boosted the Chronicle to more than 510,000 papers. Either way, paid newspapers in San Francisco have seen better days.

Outsiders say the Chronicle has suffered tangibly from competition with the Examiner, which evolved into a free morning tabloid within two years of its original sale.

Richard Nano, who sells more than a hundred different newspapers at Nick's Newsstand at Sansome and Market streets in San Francisco, has noticed the change. Five years ago he typically sold 300 Chronicles on a weekday morning and 400 Examiners in the evening. Now he's lucky to sell 100 Chronicles, while downtown office workers file past him clutching their free Examiners. He surmised that the lower demand for the Chronicle results from the availability of free news on the Internet, but that having a free newspaper for the commute home exacerbates the problem.

"The Examiner is really putting a dent in the Chronicle," Mr. Nano said. "People who work with the Chronicle say the Examiner is taking away a lot of their sales."

"This is probably one of the reasons the Chronicle's losing money -- that there are free papers out there that are grabbing readers," said Doug Cuthbertson, executive officer of the Northern California Media Workers Guild, a union representing journalists and clerical staff. "The readers may not pay attention to the quality of the reporting, as long as they're getting something for free."

In the last year, the Examiner more than doubled the number of papers it printed. Now it publishes more than 166,000 copies a day, has started a weekend edition and is delivering some of them to homes in wealthy neighborhoods. Meanwhile, the Chronicle's circulation has fallen fast. It dropped about 6% in the year ending last March, and is projected to be lower still in the next report due out next month.

Chris Blaser, Chronicle vice president of circulation, said the price increase to 50 cents two years ago might have cut into street sales, but full-price home delivery hasn't been affected by the Examiner.

"Where we compete with them is more the marginal reader, the passive reader, somebody who's on a commute who's looking for something to keep their mind occupied for 10 or 15 minutes," Mr. Blaser said. That could change if the Examiner continues to expand, he said: "I think the threat is more in the future. It's an evolving threat."

If you can't beat 'em, buy 'em

The Mercury News clearly has seen free dailies as a threat. The paper's weekday circulation has fallen from 288,000 to 259,000, or 10%, in five years. In that time the free Palo Alto Daily News and its sibling publications have only grown, now printing 68,000 copies a day. Knight Ridder, the nation's second-largest newspaper company and owner of the Mercury News, the Contra Costa Times and several weekly papers in the Bay Area, was so impressed by the meteoric growth of the Daily News that in February it bought the whole chain for an undisclosed sum.

Dave Price, co-publisher of the Daily News chain, said that rather than steal readers from the likes of the Mercury News, the free tab cultivates new readers.

"These are people who have never bothered to read daily newspapers," he said. "The potential for us to get people who don't regularly read newspapers is huge, maybe 70 percent of the population."

David Satterfield, managing editor of the Mercury News, is not so sure. "Free papers don't help -- unless you own one," he said "It's hard to compete against free. But they're also by and large very different animals. The standards aren't always the same for the Mercury News and the Palo Alto Daily News. They have different resources and different agendas."

Ed Jow, circulation director at the paid broadsheet San Mateo County Times, which in the last five years has seen competition from three new free dailies whose territories intersect in the county, said "I don't doubt that we've lost some of the circulation to free papers." But the biggest challenges are the Internet, the aging newspaper-reading population and struggles with localities over the placement of newspaper vending machines, he added.

Some long-time observers see free as newspapers' future, or as a useful experiment.

It's impossible, what we do every week putting out a six-day-a-week paper.

-- Jerry Lee, publisher, the San Mateo Daily Journal

"I'm excited, to the extent that anything that helps print survive, I'm for," said David Burgin, who has edited more than a dozen major newspapers across the country and most recently worked on a plan to start a free daily tabloid called The Daily Flash, centered in Berkeley, for the company that owns the Oakland Tribune.

Mr. Burgin said it's only a matter of time before the entire industry is affected; a newspaper that charges is likely to be driven out of business when surrounded by papers that don't.

"Lots of radical experiments need to be tried," said Philip Meyer, the Knight chair in journalism in the School of Journalism and Mass Communication at the University of North Carolina, Chapel Hill. "Newspaper companies must increase their rate of error if they are to learn how to survive."

A shrinking profession

In the last five years, the Chronicle and Mercury News together have jettisoned at least 350 newsroom jobs through attrition, employee buyouts and layoffs.

The Chronicle's newsroom is even smaller than it was in the year 2000 -- before absorbing the entire staff of the old Examiner, then owned by the Hearst Corp.. And the downsizing is far from over. After the union settled a labor dispute with management in late July -- during which Hearst said it was losing $62 million a year -- more than 200 members applied for buyouts. Management says 120 people will have to be enticed to leave or shown the door.

Two weeks ago the Mercury News' publisher and executive editor announced the paper would seek to trim 60 jobs, 52 from the newsroom, through buyouts, and layoffs if necessary.

According to its Web site, the Examiner has more than doubled its editorial staff in the last two years, to 38. That's still less than a third the size of the newsroom of the pre-2000 Examiner, under Hearst, and less than 10 percent of the present-day workforce of 420 listed on the Chronicle's site. It's also well below the industry standard of one journalist per 1,000 in circulation.

According to the Daily News Web site, all six editions of the paper together employ fewer than 30 news employees -- not counting graphic artists or the ad representatives who write entertainment, food and small-business columns as a favor to current or potential advertisers.

Competing free dailies

The San Francisco Examiner is a downsized morph of an older, more substantial paper that used to cost 25 cents and is now given away and delivered free to wealthy neighborhoods. Management says the paper, under its third owner in five years, has grown in circulation to 166,000. But it has far less news than the paid evening broadsheet that was owned by William Randolph Hearst and his descendants for 113 years before it was first sold in 2000. Owner: Denver billionaire Philip Anschutz.

The Daily News group, the first of whose six editions started in Palo Alto 10 years ago, now claims a combined circulation of 68,000. In February its owners sold it to Knight Ridder Inc., the nation's second-largest newspaper chain, which also owns the San Jose Mercury News, the Contra Costa Times, the Monterey County Herald and weeklies in the East Bay. Knight Ridder executives say the paper is working because it is profitable, so they're unlikely to change the way it works anytime soon. Its sixth edition, the East Bay Daily News, started in May and now offers up to 32 pages but still has only two news writers to fill them. Owner: Knight Ridder Inc.

The San Mateo Daily Journal's shop is the smallest of all. The shoestring independent free daily says it circulates 22,000 copies only in San Mateo County. Three staff writers produce, on average, two and a half stories a day, but sometimes as many as six. A small cadre of freelancers writes less often. Some staffers juggle multiple responsibilities; the layout artist writes a weekly column. Owner: Bigfoot Media.

These shifts mirror the general upheaval in what journalists prefer to describe as a profession, which has lost more than 2,700 jobs in the last 15 years, according to the Project for Excellence in Journalism. That doesn't count the loss of more than 200 newsroom jobs announced in the last month at the New York Times Company and Knight Ridder papers in Philadelphia and San Jose.

More pressure, lower wages

In this economy, there are plenty of journalism school graduates willing to work long hours for little pay. So reporters for the free papers are typically, though not always, a generation younger than those staffing the metros.

"There is an upside," said Barbara Kelley, a journalism lecturer at Santa Clara University. "Students can get their training wheels in an entry level job and do a little reporting. But once there, the quality of journalism doesn't encourage them in the field. I suspect the mentoring isn't there either. Students who are new reporters just out of school aren't learning as much as they would elsewhere."

They also earn less. Starting reporters at a third free daily, the San Mateo Daily Journal, earn $27,000 to $30,000 -- less than half the median household income of $68,800 for San Mateo County, and certainly not enough to attract reporters with significant reporting experience.

The Daily Journal's publisher, Jerry Lee, said his three staff writers and a handful of freelance writers produce as many as six articles a day in order to cover a county of 700,000 people. "It's impossible, what we do every week putting out a six-day-a-week paper," he said.

The Daily News pays its junior reporters more -- in the high $30,000s, comparable with the very bottom of the pay scale at the unionized Mercury News, were it even hiring. But the Daily News' most experienced reporters earn in the mid-$40,000s -- far less than the $62,000 minimum that is guaranteed to new Mercury News hires with six years' experience.

The Examiner, which was sold last year to a billionaire, is flush with capital and can pay its reporters somewhat better than the other free dailies. Yet journalists who have been there since the sale haven't gotten raises or performance reviews, according to three staff members.

Despite the potential risks to the quality of the journalism, top managers have viewed the high productivity as an asset.

"We end up with a very lean staff so we can produce this," said Bob Starzel, the former chairman of the Examiner, at a conference in April. "Our reporters are putting out two and three stories a day -- and liking it."

In response to that statement, one Examiner reporter who did not want to be named for fear of retribution said three stories a day are doable, but "exhausting," and sometimes leave barely enough time to contact a minimum of three sources for each article.

While the Mercury News is unionized, its new corporate cousin, the Daily News, is not. Knight Ridder has shown little enthusiasm for more unions. It acquired the Contra Costa Times, the Bay Area's third-largest-circulation paper, in 1995, and journalists there still aren't represented by the Newspaper Guild. Though Times reporters regularly contribute stories to the Mercury News, they earn less -- even where they work together in their newly consolidated Sacramento bureau.

Polk Laffoon, vice president of corporate relations at Knight Ridder, has indicated that the company has no intention of reworking the management or resources of the Daily News, because it has a successful formula for generating profit.

Rise of micro-dailies

The explosive growth of free daily newspapers is a worldwide trend.

Piet Bakker, a professor at the University of Amsterdam School of Communications Research, has documented the emergence of more than 100 new free daily newspapers in the last 10 years, most of which have survived. His research shows free dailies in 29 countries are now printing 18 million copies daily.

Mr. Bakker says all the evidence isn't in yet on whether free papers "cannibalize" paid papers to a significant degree.

He wrote in an e-mail: "It is hard to distinguish between losses from general trends like demographic developments or cohort-effects (younger generations don't read as much as older ones) and the economy, free-paper competition and Internet use."

In this country, most of the new free dailies are junior editions of existing metro papers that have entered the marketplace to prevent others from doing the same. Newspaper heavyweights have started free mini versions of themselves in Chicago, New York, Dallas and Washington and San Diego, with other companies starting papers in Boston, Philadelphia and Riverside County, Calif. That follows more than a decade of smaller free dailies concentrated in small communities, such as Colorado ski towns.

Many of these tabloids run on the theory that hip, snarky publications aimed at generations X and Y will encourage non-readers to pick up a paper. The hope is that eventually they will discover the sophistication of the parent paper.

Devaluing news

But many journalists see the success of free papers coming at the expense of news operations that produce high-quality journalism. Lynne Dennis, a copy editor at the Mercury News and past president of the San Jose Newspaper Guild said free dailies remind her of cut-rate subsidiary airlines staffed with inexperienced employees who make less money and work longer hours than the industry standard. Ultimately, she said, that's no way to save an ailing industry -- all it does is devalue the product in the eyes of the customers.

That devaluation has been long in coming at newspapers. There's growing concern within the industry that free papers tell people that news is no longer worth paying for.

"It's too late -- people think it's free," said Mark Fitzgerald, editor at large for Editor & Publisher Magazine. "It is the ones that are free that are doing the best. The young audience has spoken. The ethnic minority audience has spoken. They're saying they'll read, but they won't necessarily buy it."

Editor's note: The writer worked as a reporter and editor at the San Francisco Examiner under previous ownership.