Tabloid Free-For-All

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Kelly Gay, 21, is a wanted woman. Every morning, on her way to the Swinburne University of Technology, Gay is met at Melbourne's Spencer Street railway station by other university students employed to thrust a copy of Melbourne Express-John Fairfax Holding's week-old free daily newspaper-into her hands. In the evenings, on her way to work as a bartender, Gay is confronted by students pushing Rupert Murdoch's News Ltd rival freebie, MX.

The battle for Gay's attention has its beginnings in Stockholm six years ago, when Swedish media concern Modern Times Group MTG AB launched a free paper called Metro. Aimed at the same young commuter audience MX and Melbourne Express hope to attract, it was an instant hit; versions of the massively profitable Metro are now distributed to 7.8 million readers in 12 cities worldwide, from Rome to Toronto. Australian newspaper giants Fairfax and News Ltd-worried that Modern Times and Britain's Daily Mail Group were devising free Australian dailies-last year planned their own giveaway journals in Sydney, but mutual fears of multi-million dollar losses saw both projects shelved.

Which is where the matter rested until late January, when Fairfax learned that News had secretly developed a free afternoon daily over the previous six months and was going to launch after all-in Melbourne. Fairfax scrambled; within four days it had prepared a competitor to MX which was equal in size (32 pages) and comparable in lightness of content.

Commuters saw both for the first time on Monday, Feb 5. Crucially, they saw Melbourne Express first. "We looked at coming out in the afternoon last year," says Express editor Andrew Holden. "But commercially it makes more sense for us to come out in the mornings." News is furious at Fairfax's morning strategy, having been convinced any circulation struggle would happen in the newspaper-vacant afternoon zone. "This is nothing to do with commuter markets or free papers," one News executive told Time. "This is an attempt to hurt the [market-leading morning tabloid] Herald Sun." Fairfax is unrepentant. "News can dish it out, but they can't take it," says a senior Fairfax identity.

The reason for all this heat: most believe Melbourne-and Sydney, where News and Fairfax are ready to launch free papers this week-is only big enough to carry one Metro replica. The loser in the Melbourne war stands to drop millions. Even the winner will have to attract, by the companies' internal assessments, about $5 million in advertisements annually just to break even.

Steve Allen, managing director of Sydney media marketing firm Fusion Strategy, says that figure is about $5 million too low: "If they can secure the 18-34 white-collar commuter market, there will be reasonable support from advertisers. But I'm very doubtful they will generate enough revenue to cover losses, much less make a profit."

The warring camps are more optimistic. "We've got a very carefully planned product, and the reader response has been fantastic. Phenomenal," says MX editor Phil Gardner. That the audience is traveling to or from work, says Alan Revell, publisher and editor-in-chief of Fairfax's Herald publications in Sydney, will appeal to advertisers: "Not even the Sydney Morning Herald or the Australian Financial Review can claim that every one of its readers is employed." Fears that the free papers would eat into sales of existing titles so far seem groundless; both Fairfax and News claim circulation of their Melbourne papers is holding firm.

The surprise winner of the Great Freebie Wars may be neither News nor Fairfax. Modern Times and DMG have both commissioned market studies in Australian cities, and last week rumors spread that Queensland Rail had signed a deal to allow Modern Times' Metro to be distributed exclusively on Brisbane railway platforms (Queensland Rail denies the reports).

In the meantime, it's a straight fight. How do the products match up? MX, perhaps reflecting its longer gestation period, arrived as the more polished of the two; pages are sharply laid out, and the copy is furiously upbeat. Local and international politics and human rights stories are corralled in a section titled "Boring But Important."

Melbourne Express started lamely, but improved markedly by week's end. Trouble is, for a lightweight railway read, much of it is . . . well, boring but important. Tuesday's edition, for example, ran a bleak front page about nationwide gambling losses. "We need to push the fun element harder," admits Holden. "Journalism in Australia has become dull and worthy. That will have to change."

The hype over the new papers hasn't exactly overwhelmed Kelly Gay. "Which is the one in the mornings?" she asks. "The Melbourne Express? I think I like that one best." For now, she can enjoy both; which newspaper she is left with is a decision that is perhaps many months, and certainly millions of dollars, down the track.