It’s just 10 years since free daily newspapers and weekly magazines were fashionable and profitable in the UK, especially in London where the city’s “tube” underground railway made it easy to put them in the hands of commuters. Free publications seemed to offer advertisers guaranteed audiences seemingly unmatched by the sharply declining circulations of the country’s daily newspapers.
In 2012, London Evening Standard’s newish owner Evgeny Lebedev (who had acquired the paper from the Daily Mail Group three years previously) was celebrating its first operating profit since 2001, with his decision to switch to 700k free circulation. The free weekly magazines ShortList and Stylist – with a combined 1m copies and still three years away from a £35m sale to DC Thomson – increased their revenue by 16%, doubled the profit to £1.2m and prepared to launch Stylist in France. The 300k free weekly Sport (clone of a French magazine) had been sold to the talkSport radio group. The financial daily City AM boasted about having been ahead of the crowd with its free London launch in 2005. Even the lossmaking Time Out (acquired by private equity during 2010-15) had increased revenue by 9% after switching to 300k free circulation. Everyone was upbeat about free distribution; advertising-funded publishing seemed to be the way to go.
But the optimism was nothing compared with the Daily Mail Group (DMGT) whose free daily Metro had been launched in London in 1999 (four years after its unrelated namesake had burst onto the scene in Sweden). The London-based clone soon became the world’s largest free newspaper. In 2012, the 1.4m-circulation daily notched up £85m of advertising revenue and an estimated £40m of profit. Five years later, it became the UK’s most-read newspaper – bigger than stable-mate the Daily Mail and News Corp’s The Sun which had been the country’s largest newspaper for the previous three decades, with annual profits of up to £100m.
The UK Metro had been the idea of the father of current Daily Mail owner Lord (Jonathan) Rothermere who, having seen the ‘freesheet’ on a visit to Stockholm, encouraged his son to launch quickly before the Swedish publisher could get to the UK. In the event, it became the young Rothermere’s first big initiative after the sudden death of his father in 1998. It was a big bet but delivered more than anyone could have expected. It seemed to attract a readership that was primarily new to newspapers. Research showed that, before Metro launched, 70% of London commuters did not pay for any paper at all.
Soon after the London launch, the free tabloid went national with regional publishers supplying 16 local editions. The franchise network included a deal with Trinity Mirror (now Reach Plc) under which the country’s largest publisher of regional dailies printed and distributed Metro in major cities, in exchange for a share of its national advertising revenue. Part of its success was in winning display ads, especially from supermarket chains, for which UK regional newspapers had previously been unable to compete.
The Metro success was attributed to the pitching of the morning tabloid as a “high-value” (rather than “free”) product. The high-flying sales team promoted the idea of a “Metro Moment”, 20 minutes’ reading time on the journey into work, the moment that the sales director said had commuters thinking “I hate my job, I hate my boss, I want to set up a bar in Thailand.” But another key part of the strategy was Rothermere’s decision to operate the free tabloid independently, on a separate site from the Daily Mail itself.
But the profits suddenly stopped when the pandemic struck. In addition to sharp falls in ad spend – Metro was crippled by the collapse in commuter travel and a new era of working from home.
Ten years after the free publishing optimism of 2012, everything has changed. Time Out and Stylist have scrapped their print editions, ShortList and Sport have closed, and City AM has struggled to achieve consistent profitability. As of 2021, the London Evening Standard had lost almost 60% of its revenue and 35% of its staff since 2018 – and has had operating losses totalling £48m in the last four years.
So, the recent Metro performance is hardly surprising. Financials for the last five years show revenue has fallen 60% since 2017:
| Metro £m | 2021* | 2020 | 2019 | 2018 | 2017 |
| Revenue | 26 | 47 | 79 | 71 | 68 |
| % of Mail papers ad rev | 9% | 20% | 31% | 31% | 28% |
The free tabloid (which was still making some £20m of profit in 2019) ceased to be profitable in 2020 and is now believed to be incurring annual losses of some £10-15m.
It’s ironic that the 19-year-old Mail Online – which was mired in seemingly endless losses during the years when Metro was making profits of more than £40m – should have reversed the position and itself is now making profits of almost £45m, as the most profitable brand in the the newly-privatised parent DMGT, with a global audience of more than 190m.
After decades of strong profits from B2B information and events, the “new” DMGT is now some 70% dependant on the profits of its £600m-revenue consumer business (principally news). Some 55% of this revenue is generated by the Daily Mail and Mail on Sunday news brands. But, in 2021, a full two-thirds of the £60m “consumer” profit came from Mail Online which, like Metro, is advertising-funded. By contrast, more than 70% of the Mail revenue comes from readers.
At a time when soaring newsprint and distribution costs are eating into the profits even of newspapers as strong as the Daily Mail (with a daily circulation still averaging some 800k copies and now larger than The Sun), DMGT is working hard on its embryonic Mail+. This subscription-funded, advertising-free digital service comprises all Daily Mail content (including some provided the day before the newspaper itself), video, podcasts, and a large puzzles and games section. It gives readers the choice of a traditional page turning edition or an interactive website-style format.
While the branding is confusing – ranging across MailPlus, The Mail+, Daily MailPlus and Mail+ – this really does look like the future for DMGT and the perfect paid-for complement to the free Mail Online.
Mail+ is believed now to have up to 100k subscribers at £10.99 per month. It may have four times as many non-subscribing browsers. Although it is three years’ old – and a page-turning edition of the Daily Mail has had subscribers for almost a decade – Mail+ has only just begun.
That’s why Rothermere (now DMGT’s 100% owner) must be wondering what to do with Metro. There are a few possibilities. He might contemplate pulling back the free newspaper just to a London edition (accounting, presumably, for some 50% of the current free circulation) which might just restore it to profitability. But the dismal performance of Lebedev’s London Evening Standard is not encouraging, especially given indications that commuting in the UK capital may never recover to pre-pandemic levels. But longterm deals with printers and distributors might even make scrapping the non-London editions of Metro almost as expensive as closing the newspaper completely. But the growth of Metro’s online readership might just encourage DMGT to consider turning it into a digital-only product, perhaps angled more specifically, say, to sports or puzzles or entertainment. Such a strategy might even be encouraged by the growth of wifi on the “tube”.
It is, however, difficult to escape the conclusion that the 23-year-old UK Metro was a product of its time: when commuting was hot, newsprint was relatively cheap, and print advertising was still a major part of many schedules. Like other free publications, it might also have benefitted from the then freefall of the UK’s national daily newspapers. But that was then.
For the de-listed, rationalised DMGT – whose operating profit has been reduced by some 40% – there is an obvious imperative: to cut the Metro losses and, perhaps, the newspaper itself.
The answer may be to divert at least some of that Metro investment to Mail+. It could be the product to disprove the post-digital assumption that online readers will pay only for exclusive journalism and that popular news must be ads-funded and free for readers. In an era of increased aversion to advertising, perhaps even young readers can be persuaded to pay for a bespoke ads-free package of news, information and entertainment.
Mail+ should: develop more exclusive content, perhaps especially with distinctive video and audio “channels” (Mail Radio and Mail TV?), sort out the branding (!), and promote it to the many Daily Mail (and other) consumers who don’t even know it exists. It needs to become something other than DMGT’s best-kept secret.
The Daily Mail publisher is not, of course, the first legacy news business to wrestle with the task of developing new services that risk accelerating the decline of profitable core brands: it’s tough being both an insurgent and incumbent. But it eventually found a way through the dilemma with Mail Online, not least by exploiting markets (like the US and Australia) where the publisher had no newspapers to defend. That success should embolden DMGT to maximise the multimedia potential of Mail+. It may be the future of popular news.
