Feature

Metro at ten

After a difficult birth, Metro almost didn't make it beyond ten months. Alasdair Reid looks at the progress of the free newspaper that redefined the market.

In the advertising business, there have always been one or two hard-hearted observers who (it has to be said) have remained sceptical about the official Metro story as told to them by Associated Newspapers. But we'll ignore them for now. Birthday celebrations are upon us - and it's a time to give generously. Metro launched in the UK on Tuesday, 16 March 1999. It will soon be ten.

According to the authorised version, the title (and, indeed, more broadly, the concept) arrived on these shores courtesy of a "eureka" moment in the mid-90s when Lord Rothermere (or plain old Jonathan Harmsworth as he was at this point, his father still being alive) jumped on a tram in Stockholm.

The notion of Lord Rothermere sitting on public transport in Stockholm is surreal in itself - but we'll let that pass. Apparently, he couldn't help noticing that everyone boarding the tram helped themselves to what seemed to be a newspaper, available for free from display bins. They seemed terribly engrossed, whether their journey was a short one or a long one. And almost by definition, as commuters, they seemed affluent and intelligent. This, surely, was an attractive captive audience.

He made further inquiries. The title, he was told, was called Metro and was published by Metro International, then a subsidiary of Sweden's media conglomerate, Modern Times Group.

Back in London, he realised that if he successfully embraced this innovation, it could show he was ready to inherit leadership of the company from his father when the time came. And along the way, he would prove he could form just as potent a relationship with the company's latest editorial guru, Paul Dacre, as his father had with Dacre's predecessor, Sir David English.

So, according to this version of events, some time during 1997 he began plotting with Dacre and Murdoch MacLennan, the then managing director of Associated Newspapers - and, ultimately, they poached Thomas Grahl, a director of Modern Times Group, and brought him to London.

Then they approached Transport for London - and negotiations were protracted, with TfL fretting about the potential fire hazard if tons of discarded news print was allowed to build up on the London Underground system. But talks eventually bore fruit, with Associated winning a ten-year exclusive distribution deal, which promised TfL up to £1.5 million a year in return.

The rest, as they say, is the stuff of tenth anniversaries. It was an innovation whose time had come - and its success was as inevitable as it was to be welcomed by a newspaper industry hungry for good news.

There is, though, as we have already indicated, an alternative version. Some in the ad business don't remember it the way they're supposed to. Not exactly, at any rate. They tend to recall a dawning sense of panic at Associated when, in 1998, having successfully set up operations in both Prague and Budapest in addition to Stockholm, Metro International let slip that it was setting up a London office. Clearly, the implications for one of the existing jewels in the Associated crown, the Evening Standard, were enormous.

Especially as there were also rumours that News International was looking at plans for a free London title - and Rupert Murdoch's empire already knew about frees, having tinkered with the concept in Australia.

So it was all hands to the Associated pump - but its response was less than impressive, some say. Yes, it blew a big fanfare about its intention to launch Metro, but the whole business was deemed so poisonous to Associated culture that the title was developed almost as a pariah project, hatched in an isolation ward down at the company's Surrey Quays facility, well away from Associated's Kensington headquarters, where papers such as the Daily Mail were (and are) produced.

What's more, as launch date loomed, things seemed to be going horribly wrong. Kim Chapman had been drafted in from one of the group's regional newspapers, the Evening Post in Reading, in November 1998 to be Metro's launch editor. But so violently did Dacre take exception to her dummy designs that he humiliated her in front of her staff by tearing them up.

She walked. This was in mid-February - and with the clock ticking, Dacre drafted one of his rising Daily Mail stars, the associate news editor Ian MacGregor, as Chapman's replacement. There was, however, speculation that Metro might now miss its scheduled 9 March launch date. It did. But there were those who reckoned the extra week was neither here nor there. Media agencies were unimpressed.

"To be brutally honest," one senior press buyer admits, "I thought it was awful. I saw it very much as a spoiler. There were all sorts of rumours swirling around about what Murdoch or Metro International might be about to do and I wasn't alone in thinking that this was Associated protecting its Evening Standard patch - and having made this pre-emptive strike, the other potential rivals would just go away."

After all, this was exactly what had happened before, in 1987, when Associated had zapped Robert Maxwell's London Daily News, by relaunching the Evening News - a title that had closed due to lack of interest a decade previously. "From an advertising point of view, all we planned to do was throw Metro a few scraps," one buyer recalls.

And that might have been that, if it weren't for the fact that news began to filter out that Metro International wasn't going away. Having conceded London, it had turned its attentions to the regions and was plotting titles in, among other places, Manchester and Newcastle. Fearing encirclement, Associated now developed a regional expansion strategy of its own - leading it down the, at times painful, road that has led to the national Metro proposition we have today.

But first, having convinced itself that it needed to be in it for the long haul, Associated had to make sense of the business model - and for that we have to thank Mike Anderson. In mid-1999, he was drafted in from the company's contract publishing division to take Metro's commercial reins, becoming, eventually, Metro's managing director.

He almost killed it stone dead. Readers weren't a problem. By June, Metro's audited London circulation figure had climbed to just over 300,000 and audience research indicated a readership of 431,000. However, turning consumption into profitability was proving a challenge. Anderson did two things. First, he pointed out that Metro was read daily for 20 minutes by 15- to 44-year-old ABC1 commuters who didn't previously read papers - and he marketed this as "the Metro moment". Second, he doubled ad rates overnight.

The response to this second part of the Anderson equation was a buyer revolt - there was a clandestine meeting of agency press heads, leading to an informal boycott. As one of the ringleaders recalls: "As from October, we pulled off for at least two months. I think a lot of people on our side of the fence expected it to go under.

"What saved it, arguably, was the dotcom boom. There was plenty of non-mainstream business floating about and it took its fair share. A lot of this was direct response business, which helped to save it because the response rates were good. So we, like everybody else, drifted back."

And by the time the dotcom bubble had burst, Metro had established itself as an integral part of the mainstream. It entered profitability in 2003. More by luck than judgment, some say, Metro had invented a robust free commuter newspaper model fit for the 21st century. Associated, in many people's eyes, had been the "wrong" company to achieve this. It was a company known for its quality brand values, its addiction to strong coverprice cash flows and its commitment to high levels of editorial investment. It was aggressively vocal, for instance, about the way that rivals used bulks - complimentary and promotional copies - to boost their circulation figures.

Yet that, in hindsight, was the whole point. Previously, the free newspaper market had been characterised by low-quality editorial products distributed using shoddy methods. By the end of 1999, Metro was, thanks to Associated heritage and instincts, a class act. But it was a close-run thing. Forget ten years. If the truth be told, Metro was lucky to survive its first ten months.

The model it established has evolved down the years - but the free newspapers and magazines we've seen since have all, more or less, adhered to the quality lessons learned from Metro. The roll-call includes Sport, thelondonpaper and London Lite (all of which appeared in September 2006) and City AM (September 2005).

Recently, however, there have been clouds on the horizon. For instance, there's a growing perception that something will have to give in the battle of the London evening frees. And the model came under scrutiny when Metro International announced in January that it was closing its Spanish operation because of losses.

Yes, but figures from Nielsen for the fourth quarter of 2008 indicated that advertising volumes in free newspapers have been holding up well. Paul Thomas, the investment director at MCHI, argues that, overall, the model pioneered by Metro in the UK is still sound: "From an advertising point of view, what continues to be exciting is the fact that free newspapers allow you to break more rules than before. Consumers know that you don't get anything entirely for free so they are prepared to tolerate things that they might not in a paid-for title. We're able to do more content-related things."

And, indeed, Metro's advertising innovations have arguably helped publishers on frees and paid-fors alike reassess their commercial philosophies and rules of engagement.

Crucially, Steve Goodman, the managing director of print trading at Group M, argues the stigma that previously surrounded the whole notion of free newspapers has gone. "It took us a while to get our heads around that," he admits. "We doubted whether readership of a free newspaper could have the same value as paid-for readership. The difference came when we saw Metro working in practice - you had to admit something important was happening when you saw huge numbers of people were reading it."

So what have we learned from ten years of Metro? According to Lawson Muncaster, the managing director of City AM: "We've learned that people are interested in shorter, fact-rich articles rather than opinion pieces. I think they're interested in graphics, personalities, vox pops. If it's short, sharp and sweet, they'll take to it. I think we've shown that, where previously it was about filling a time gap for commuters, we're filling a knowledge gap. We've also proved you don't have to have a licence from TfL to distribute a free newspaper. So, in the future, I think we'll see lots more initiatives targeted at smaller niche audiences. It's exciting. I believe there are now more people reading newspapers in London than there have ever been before."

Perhaps. But Metro arguably also faces greater challenges than ever before. The signs are not all good for free newspaper publishers - as well as closing its operation in Spain, Metro International has just announced an operating loss of EUR20 million. The relaunch of the Evening Standard, which is likely to include a free distribution element, by its new Russian owner is also likely to put greater pressure on those operating in the capital.

And, for Metro, the beginning of its next decade of existence is likely to be dominated by a scrap for the TfL licence it holds. While its management has indicated that it will continue with hand distributors, should it lose the contract to News International or another rival, this could be a fierce and costly fight.

TEN YEARS IN THE LIFE OF METRO

March 1999 - Metro, edited by Ian MacGregor, launches with a print run of 100,000 distributed via 72 London Underground stations, with plans to increase rapidly to 350,000 copies and more than 260 stations.

June 1999 - Its first Audit Bureau of Circulations figure - an average daily circulation, during May, of 286,805.

October 1999 - On the instigation of Mike Anderson, newly arrived to head up Metro's commercial operation, ad rates are doubled overnight. As a result, some media agencies boycott the paper.

November 1999 - Metro launches in Manchester, Birmingham and Scotland, sparking turf wars with local publishers. For instance, in Manchester, the battle is with Guardian Media Group, which counters the arrival of Metro North West with Manchester Metro News. The resolution to this stand-off - a joint venture agreement - provides a model for all subsequent expansion.

June 2000 - Launch in Newcastle, in partnership with Trinity Mirror.

September 2000 - Tim Jotischky succeeds MacGregor as editor.

January 2001 - Leeds launch in partnership with the Johnston Press flagship, the Yorkshire Post.

September 2001 - Kenny Campbell succeeds Jotischky as editor.

September 2002 - Anderson is given additional responsibilities as the managing director of the Evening Standard. Metro's deputy managing director, Steve Auckland, takes over the day-to-day running of Metro. He officially becomes the managing director of the title in 2003.

February 2003 - Metro becomes operationally profitable for the first time.

May 2004 - Launch in the East Midlands conurbations.

June 2004 - Launch in Bristol.

October 2004 - ABC figures for September show its average daily circulation above one million for the first time.

March 2006 - Launches in Cardiff and Liverpool, in joint venture deals with Trinity Mirror.

June 2006 - Now accepted as a credit to Associated culture, Metro's headquarters are moved from Surrey Quays to Kensington.

August 2008 - National Readership Survey figures for the July 2007 to June 2008 period show Metro's readership above three million per day.

SIX OF THE BEST: ADVERTISING INNOVATIONS IN METRO

BT - in October 2002, the telecoms giant uses the first, and so far only, broadsheet wrap on Metro to promote the launch of its new broadband offer.

Nike - in November 2004, Nike's agency, Mindshare, agrees a deal with Metro to publish a special one-off evening edition, with a 100,000 print run of the newspaper, to promote the Nike Run London theme of "go nocturnal" as the run was taking place at night.

Adidas - in March 2004, the sports brand uses Metro for a campaign to support its "impossible is nothing" positioning. This includes Metro's first backpage ad.

Jack Daniel's - as a Christmas campaign in December 2005, Jack Daniel's runs a glossy four-page insert in Metro.

Spider-Man 3 film launch - in October 2007, Metro runs some innovative ads that feature Spider-Man images bleeding into editorial copy.

Lucozade - in May 2008, Metro unveils its largest-ever cross-platform campaign with the Lucozade "Alert" challenge featuring on its metro.co.uk website as well as in-paper advertising and product distribution at mainline stations.

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