When daily business freesheet City AM publishes its 1,000th issue this Friday (October 23), it will launch into a very different market from the first edition in 2005.
There is currently fierce debate about the value of “free content” in the media industry. Earlier this month, the London Evening Standard went free for the first time in its 181-year history. But that came just weeks after News International’s failed free title Thelondonpaper ceased publishing.
So how has City AM, owned and run by chief executive Jens Torpe and managing director Lawson Muncaster, managed to make the free model work? On its launch four years ago, critics said a free upmarket business title relying on distribution by hand could never work – certainly not with City AM’s £10m budget.
Both Torpe and Muncaster are former Metro International men and had previously helped launch that free morning title into many of the 150 cities around the world where it is currently established.
“Hand distribution worked for us when launching in Paris, New York and Hong Kong,” says Torpe.
That initial reliance on hand distribution has now been partly replaced by strategic corporate deliveries, a move that has doubled circulation to 108,000 in City AM’s short lifetime.
Like the Evening Standard, which has pledged not to let its commitment to quality journalism slip despite its lack of a cover price, Muncaster claims that editorial standards are also key to City AM.
He says that City AM’s 30 journalists make up the second largest business desk in the UK after the Financial Times. He claims: “The average age of our reader has risen from 33 to 39. That older generation who didn’t understand the free model now knows City AM as a part of their business life – it’s not a passive read.”
No ‘copy and paste’ news
The pair feel it is also significant that City AM launched without the aid of newswire Reuters. “Our journalists understand that we don’t want the ‘copy and paste’ approach. They spend 240 hours per day between them digging out original stories,” says Muncaster.
And because the daily title goes to press at 1.30am, it can boast an edge on most national newspaper desks. The late deadline has seen City AM become a regular home for the day’s “scoop” in the business world. When Lehman Bros collapsed in the US last year, City AM was the first British paper to announce on the front page it was going into liquidation.
And if the editorial side of the operation is functioning well, the commercial side is matching it. Despite the fact that Torpe and Muncaster have only spent £6.5m of their original £10m launch pot so far, City AM is profitable.
“We’ll turn into a national product when we’re ready,” says Torpe. “Last year we grew revenue by 21%. Before the recession, the plan was to double the circulation to 200,000 by introducing the title to a handful of UK cities outside of London over a two-year period. Then the advertising market plummeted. We still have those plans when the market returns.”
City AM has dabbled in podcasts and “mobizines” – news stories sent to users’ phones. But despite the planned launch of a new digital product next month, Torpe insists online is not core to City AM’s plan for “free” domination.
“Our website is merely a holding page for news,” he says. “Online content is where all the cost problems are. So why would we try to compete with FT.com? We know what we’re about. We’re a condensed 20-minute read for business people on their way to work.”
So with other media brands moving to the free model, what should they bear in mind to become profitable?
Torpe speaks up. “A lot of people think there is something wrong with the free model. There isn’t. Five publishers cannot make money in a city of 2 million people. There is room for two but not five. The problem becomes exacerbated if they all produce exactly the same product.
“Mainstream news, gossip, celebrity stuff and so on. The free model works. But you need to give an audience something it can’t get for free elsewhere.”
Muncaster takes over: “The old fashioned view of newspaper success was based on circulation. The world has changed. Today, you find the demographic that you want to own and have a relationship with them. Forget the rest.”
Add value, not numbers
Muncaster and Torpe believe there is a defined number of people in the UK that they can target with City AM, (“half a million on a daily basis and maybe 750,000 in a week, maximum”). The idea is to meet that audience number and add ever more value to them with engaging advertiser-led products.
“In Spain, three free titles have closed, so they say ‘free’ doesn’t work,” says Torpe. “But in the US, 40 paid-for newspapers have closed this year – it’s not the model that’s broken, it’s how they’re using it.”