Worldwide, there are now over 44 million free newspaper editions being distributed every day; this is up from 24 million in 2005. Europe has the vast majority of daily free papers at 28.5 million, with the Americas at 6.8 million and Asia/Pacific/Africa regions at 8.6 million.So why is there not one in Auckland?
I have identified three "critical success" factors for a free newspaper:
- Distribution. A publisher will be able charge more for advertising space in a newspaper if more people read it. To this, a free daily newspaper must secure a sustainable, and if possible, exclusive, distribution channels. I.e. bus stops, buses, train stations, trains, kiosks down streets, cafes etc.
- Cost efficiency. The only factor driving the top-line is advertising revenue, which means that cutting costs is the key to long term financial viability. The publishing costs (printing, overheads, design, content) of a newspaper must be controlled to ensure that a profit is made.
- Consistent, high-quality content. In the mainstream media, reputation is everything. Cost efficiency cannot lead to a budget publication. To raise barriers to entry (protect the market from competitors), reputation of the newspaper is one lever that can be controlled. Content must be topical, punchy, and informative.
Points 2 and 3 touch on an important issue: the FDN market has relatively low barriers to entry. If an independent newspaper broke into the FDN market in Auckland and started cannibalising the NZH readership, the APN may look to introduce a competitor, in an attempt to leverage existing distribution / publishing resources to drive the new FDN out of the market. There are only two things the new FDN can do to protect against this: secure exclusive distribution channels and build a strong reputation so as to demand top dollar from advertisers.
From a numbers perspective, consider the following analysis:
- The estimated working / permanent population of Auckland CBD is 40,000. Of this, it is estimated that 33,000 people enter the CBD by public transport on a daily basis. Assume you distributed the FDN successfully and 75% of those daily commuters spent on average, 5 mins reading the FDN ( ~ 25,000 daily readers).
- Without doing a detailed comparison based on APN ad rates, lets assume the average cost per ad is $1,500 p/day (effectively 6c per reader). The FDN is 10 pages long, and has a content / ads ratio of 50:50, with room for on average, 6 ads per page (total average of 30 ads per edition).
- Based on the above two points, daily advertising revenue is ~ $45,000.
Without doing any further analysis as to the cost of publishing an FDN, I can say that for the idea to be viable, the daily cost to produce the FDN would have to be less than the above.
Looking for contributors to the idea - any initial thoughts?