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Metro's 20 minute newspaper 25 October 2004
"I've been in this business for 30 years and for the first time we're really seeing lots of exciting things happen.”
Jim Chisholm of the World Association of Newspapers, in The International Herald Tribune
Metro is the largest and fastest-growing international newspaper in the world. It publishes every weekday and is distributed free of charge in 54 cities across four continents, from Stockholm to Seoul to Boston. Its goal is to provide a 20 minute reading experience to those under 45 who aren’t in the habit of reading a newspaper.
Reading Metro on the train
Since its first edition was launched in Stockholm in 1995, the company has been very successful in gaining readers and in entering new markets. Metro now has a daily readership of 15 million people. For comparison, the daily readership of USA Today, America’s “national” newspaper, is about two million.
70 percent of Metro readers are under the age of 45. These people are very attractive to many consumer products companies, and as a result Metro's advertising sales have grown at a compound annual rate of 47% since the launch of its first edition in 1995.
Success has brought imitation, and a number of established newspaper companies are competing against Metro. In September, the conservative French daily Le Figaro announced plans to launch a new paper in Paris that will be competing with Metro for readership. In Spain, there’s a competitive offering called 20 Minutes, named for the amount of time it takes to read it.
While Metro and its competitors are growing, overall newspaper readership has been famously declining for 6 decades, especially among the kind of younger readers who now read Metro. In 1950, for example, the average US household bought 1.23 papers a day. By 1990, only 67 percent of households bought any kind of newspaper at all, and by 2000, it was 53 percent. As alternatives to the newspaper, from television to the internet, became prevalent, the time spent reading a paper has been crowded out by other activities.
Metro and other 20 minute papers won’t reverse this overall decline. But they have tailored a distinctive product to a specific need. For 15 million readers a day, the Metro does a great job of filling the space taken by their 20 minute commute or 15 minute coffee break. As the Metro publicists put it on their website:
“Metro is a prime time ambient media that reflects modern people’s busy lives and capitalizes on the downtime commute in the morning to deliver a unique global audience.”
Each Metro edition is locally staffed with a small and flexible work crew. Global advertisers can buy space in a number of editions, and they advertise along with local retail businesses.
The four factor model of innovation success demonstrates the attractiveness to readers of an offering like Metro:
Metro – low price and wide availability
Compared to newspapers that are purchased, Metro has both a lower price and wider availability in its markets. Its short format makes it easier to read quickly, although for the same reasons the news content will be lighter – the articles are shorter and there are fewer of them.
While the four factor model indicates the basis for Metro’s success with its readers, it doesn’t address the profitability of the company’s business model. This is a major problem for the company, which continues to lose money.
Because of the large fixed costs and the time required to establish a presence, most newspapers and magazines lose money for the first several years of publication. Investors hope that these businesses will attract enough readers and advertisers to become consistently profitable by year three or four.
This has been the case for most of Metro’s editions. For example, the company’s most profitable edition is the original one in Stockholm, which posted $11.4 million in earnings in 2003. Overall, however, Metro lost about $7 million on sales of $204 million in 2003. The stock, which trades in Sweden, is down from 81 Kroner, when it went public in 2000, to about 12 Kroner now, which works out to around $1.70 a share.
Inevitably, Metro will have to withdraw from some markets even as it develops new ones. The company has already withdrawn editions from Newcastle, UK and Zurich, Switzerland because it could not make a profit quickly enough.
Metro’s success with readers and advertisers, however, demonstrates the appeal of the approach. Even in an industry that has been in decline for decades, there are areas of dynamic growth that create new experiences for customers.
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