Media Perspective: Why giving it away for free isn't always the winning option

We all like to get free stuff. Which is why so many people repeat the same observation that the two sweetest words in the English language are "free bar". In media, though, free doesn't always add up.

Media buyers seem to be encouraged that the London Evening Standard is investing so much behind its brand in a bid to survive against fierce evening competition from the freesheets - Associated Newspapers' London Lite and News International's thelondonpaper.

Advertisers, so the argument goes, like things with a cover or subscription price as this attaches a "premiumness" to the product. Therefore, many of them want the London Evening Standard to succeed in its attempts to build a paid-for circulation through various methods.

On the surface it might seem that the free newspapers are struggling in this downturn. Last week it emerged that News International lost almost £13 million in a year on thelondonpaper. Elsewhere, Metro International is disposing of its loss-making US freesheets in a bid to balance the books: a sign that giving content away for free doesn't always work.

It's a different market, but this also coincides with the realisation (explored in more depth on page 14) that giving away content online doesn't always work either. This week we've seen Rupert Murdoch's The Wall Street Journal announce a move to a new micro-payment system to access individual articles (the title already has more than one million subscribers who pay in excess of $100 a year to access content online). Guardian Media Group is also looking at charging for content.

Two points, though. First, we shouldn't write off free newspapers just yet (Metro in the morning continues to offer a highly profitable business model, for instance, and though thelondonpaper's losses are large, they were smaller than the £16.8 million the title lost in its first ten months, up to June 2007. NI claims that advertisers are supporting the paper in greater numbers and that ad revenues rose by 75 per cent).

Second, it's likely that in the UK publishers will find it harder to charge for general news content because of the presence of the BBC. Its vast and free-to-access online resources make it less likely, though not impossible, that consumers will be willing to shell out for, say, online entertainment coverage from The Times and The Guardian.

Clearly the way forward is for publishers to charge for niche and specialist content that other organisations cannot provide. Or deliver the information in better and more interactive ways. Hence the reason why News Corporation is thought to be looking at its own version of Amazon's Kindle reader and why a mobile platform forms a significant part of the London Evening Standard's relaunch.