Subway Successes

The 800,000 rush hour commuters on the London Underground have more in common these days than frustration over tardy trains. Pinstriped executives, blue-collar workers and backpack-toting students all pass the time perusing Metro London, a free tabloid launched less than a year ago that boasts a weekday circulation of 350,000. Of those 350,000 papers, many are passed along to additional readers, and by midmorning it's virtually impossible to locate a copy.

Free newspapers aimed at urban commuters are a hot trend in publishing on both sides of the Atlantic. With low overhead--most of their content comes from wire services--and a captive audience, these publications are potential cash cows thanks to eager advertisers lured by attractive demographics. Media powerhouses like Britain's Associated Newspapers and Sweden's Modern Times Group (MTG) are among those battling over the lucrative terrain, and last week MTG's first foray into the U.S. landed the company in court.

Rival publishers Philadelphia Newspapers Inc.--the parent company of the Philadelphia Inquirer and the Philadelphia Daily News--the New York Times Co. and USA Today parent Gannett argued that MTG's contract with SEPTA, the transit authority in Philadelphia, gives the Swedish company an unfair competitive advantage by permitting distribution in areas that are off limits to others. A federal judge refused to block the distribution of Metro Philadelphia, but the opposing publishers have appealed that ruling. Another provision of the MTG-SEPTA agreement they have attacked is the requirement that Metro Philadelphia "must conform to SEPTA editorial standards for content."

The concept at the center of the fuss is hardly revolutionary. Cities in the U.S. and Europe have long been littered with giveaway publications financed entirely through advertising. But when MTG launched the first of its free dailies in Stockholm in 1995, distribution via the mass transit system represented an innovation. Today, Metro Stockholm is flourishing, with a daily print run of 240,000 and a claimed readership of 635,000. What began as a dubious 24-page experiment now weighs in at 50 pages, fat with ads. MTG's three Swedish Metro papers, published in Stockholm, Gteborg and Malm, had a turnover of $33 million for the first three-quarters of 1999, up from $25 million for the same period of the previous year. "Metro has changed the newspaper reading patterns of Swedes," says Stockholm media analyst Alan Wilson. "It is all the young people read." These youthful readers are exactly the ones advertisers covet, and are the basis for the continued success of the Swedish prototype's incarnations throughout Europe.

It was results like these--and rumors that MTG was preparing a London edition--that prompted Associated Newspapers, publisher of the London Evening Standard and the Daily Mail, to launch its own subway freebie, Metro London, last March. Says Kevin Beatty, managing director of Associated London Publishing, "We knew there could be some cannibalization on the edges of our circulation, but the opportunity was too big" to let pass. Aided by securing a trademark on the name Metro and a 10-year contract with London Transport, Associated has made good on its calculated risk.

Despite the rush of advertisers and imitators, Metro Philadelphia's challengers are not the first to question the effect these arrangements could have on journalistic integrity. Although he expresses admiration for what he calls an "ingenious" distribution technique, University of Stockholm media expert Stig Hadenius is troubled that "the business agreement between the [Stockholm] transport authority and MTG is secret. We know that the paper is carrying a page with a free advertisement every day, but whether there is an agreement that Metro must not criticize the transport company is unknown to the public." Associated's Beatty will not disclose the substance of his company's contract with London Transport, and says that London Transport's editorial input is limited to the single page of mass transit information it contributes each day. Last week SEPTA spokesman Richard Maloney insisted that the transit agency would exercise "no editorial control" over Metro Philadelphia.

The real test of these publications' journalistic credibility will be how--or if--they cover controversial transport-related stories like labor strikes and major breakdowns. Given the troubled recent history of SEPTA and London Transport, that day may not be far off.

With reporting by Fred Mogul/Philadelphia and Ulla Plon/Copenhagen