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Free Newspaper Scoops Swiss Top Circulation 

By Philip M. Stone

The Swiss are prolific media readers --  some 97% of the population read at least one newspaper daily and 94% read magazines. And if they read a free newspaper then many will also read a second newspaper. An advertiser's paradise.

But strange things are happening in the Swiss market, and if they happen here they will happen elsewhere:

  -- The free newspaper 20 Minutten (20 Minutes -- about the time it takes to read it) has surpassed Blick to become the country's highest circulation newspaper  at 782,000 copies representing a 13% annual growth. That follows a 40% circulation growth the year before.

 -- Edipresse, one of the country's largest publishers, shocked the markets this week with a 9% drop in H1 net profit while the markets had expected an 18% increase. Sales were down 2% in Switzerland and the overall figures would have been much worse but for strong sales success with its properties in Spain and Portugal. 

So what does this all mean?

Free Newspapers Are Here to Stay

Free newspapers are here to stay and they will continue to eat away at circulations of their comparable paid circulation papers. I doubt anyone  thought the entertaining Blick would ever lose its daily circulation crown -- except perhaps its publisher, Ringier -- Switzerland's largest -- which turned Blick into a tabloid a few months ago (If you can't beat 'em, join them!). 

It's not that Blick did that badly, circulation dropped some 10,000 during the year to 736,000, but 20 Minutes did amazingly well in a still very difficult market and added some 90,000. But will 20 Minutes continue to pull away? 

It needs to because 20 Minutes depends entirely upon advertising for its revenue, and is said to still be awash in red ink, whereas Blick is in the black. But with 20 Minutes taking the circulation lead and by being able to charge higher rates for its advertising it will be an interesting to see how the agencies play this one. 

20 Minutes follows the Metro style -- some 30 pages daily, of short national and international news stories, entertainment, sports and consumer affairs. Its readership is young and the circulation  increase indicates the newspaper answers the information needs of its audience (and no doubt the price is right!)

So will free tabloids  rule newspaper circulation globally? No. But they are going to steal away those readers your advertisers most want their hooks into -- the young, free-spending, out for a good time guy and gal. And the truth is that while newspapers have been doing surveys for years on what their readers want from them, the changes made from those surveys have been miniscule and seem to have focused more on style rather than substance.

For the Young Reader, Free is a Good Price

As we said at the beginning, the Swiss are prolific newspaper readers and it is very likely many will read a tabloid and still buy another newspaper. But will that happen in less affluent countries? Doubtful. Young commuters will be happy with what they get for free and if the advertiser wants that reader there is only one place to go.

The Swiss newspaper market is still weak. Most predictions are for the overall Swiss economy to grow by 2% in 2004, yet Edipresse  advertising income dropped nearly 4%  in H!, 2004 compared to the same period in 2003.There are few signs of improvements until 2005. Edipresse explained away its poor showing by saying it had high product launch costs and was investing heavily internationally for the long-term future -- and their international business looks quite healthy --  but its turnover in Switzerland showed  a 1.7% decrease.

As Edipresse wrote in its annual statement, "It is advisable  to be cautious about the outlook."  Or, put into plain English, as we wrote in an earlier column, "Keep those spending floodgates closed."     

Philip M. Stone of  Stone & Associates, a partner in followthemedia.com

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