Sing Tao newspaper (HK) is following the footsteps of Europe and the US (likes of Metro)

I hardly read newspapers from Hong Kong anymore, because of their generally poor quality, poor accessibility (for me anyway) and sometimes shallow and misleading articles (as you may know, I'm much more interested in international news than I am in local news); however, as I was reading Florence's blog Over the Rainbow and Duke's blog lately, it seems that HK is finally tackling the free newspaper market, following the footsteps of Europe, UK and the US, trying to catch up with the imminent trend.

Free newspaper is nothing new. In 1999, when London-based free daily newspaper Metro was launched (it originates from Sweeden, but London was the first place it landed on), it literally has a monopoly to itself, with millions circulating the underground (plus other cities) each day. It's not the case anymore of course, and many entrepreneurs quickly spotted the opportunity, God knows how much money they made (and making), and apparently their main revenue is from advertising. (Unofficial figures states about 20+ million pounds profit each year)

Although I haven't talked about the phenomenon of free newspapers, I have, however, talked about the strange phenomenon of the HK media industry comparing with the media industry in the UK here and here. Therefore, when I tried to apply what I've said about tabloid papers onto the free paper case, it's not that hard to actually analyse what implication these free newspapers have on the media industries as a whole, because I believe that essentially free newspapers is a transformation, or evolution of tabloid paper.

To me, how and why free newspapers appeared in HK in the first place is unimportant, the reason is clearly written on Sing Tao's CEO's face, and many HK bloggers had already noted that, I have nothing to add. However, what I'm interested in are the questions Does it actually work? What implications do free newspapers have on the HK media industry as a whole? I would like to conduct an informal investigation into this (like I always did), and try to analyse the situation from a few pre-defined perspectives, and try to come up with a conclusion from what I've found out.

If you didn't know what I was talking about, please, go up, click on the links, and read the two posts that I have written (they are prequel and sequel of each other), then you will have a better idea of where I came from with my points.


1) The nature of free newspapers

If any of you have read a copy of Metro or something similar, it's not difficult to find out that in fact free newspapers are in many ways similar to tabloid newspapers. One can simply look at where the free newspapers are being circulated - big cities, and especially London, right outside the tube stations, bus stops, outside busy shops etc.. I remembered that, when I use to leave my flat in London for a 9 o'clock lecture at Imperial, if I leave home later than usual (say 8:45-ish) then all the Metros will be gone; I only see them if I leave home before 8:30. This not only shows you how popular the free newspaper in UK had become (according to Associated Newspapers, Metro's managers and publishers, more than one million copies of Metroare being circulated each day throughout the UK), but also what kind of people who reads them (blue and white collar working people). From them you can probably deduce the nature of free newspapers - a quick and easy read, because they are very short of time, with average tube journeys under 30 minutes.

I've picked up a copy of Metro once, it's quite thin by quality newspapers standard (less than 30 pages, FT has more than 50 sometimes), but it has everything - from Local news, International news, to comments and sport. Most importantly, from start to finish it took me less than 30 minutes to read...Hang on, ain't that what tabloid newspapers are?

Ok, so there are no top-naked page 3 girls, but judging by the standard of written English, informativeness, quality of pictures, it's really walking the fine line between serious and tabloid journalism - it has the seriousness of traditional journalism, but in a tabloid format where pictures are big and words are relatively scarce (I shall emphasise here again, it takes me on average one hour to read the FT from start to finish) - therefore one can conclude roughly that free newspapers are the hybrid between serious and tabloid journalism. That's the description at best, most journalists still class free newspapers as tabloid newspapers, mostly because of their content and format.


2) Why free newspapers?

This is perhaps the most simple question of all, and it doesn't include much business sense either.

You have paid quality newspapers and you have paid tabloid newspapers, so why free ones? Well, simple - it's FREE of course! In the UK it costs £1 to buy a copy of FT, and other quality newspapers aren't relatively cheap either; most tabloid newspapers costs about 30p or so, but even that can't beat 0p - free! This mentality is the same everywhere, whether it's Sweeden, Hong Kong, or Seattle. If it's free, it wouldn't do anybody any harm to pick it up, so why not?

More importantly, what creates better advertisement methods than a product that's free? Metro has more than 1 million copies circulating everyday, therefore the free newspapers, if successful, can survive on shear advertisement revenues alone, and that's how free newspapers survived. Even Hong Kong's first free newspaper Metropolis Daily (whose parent company is also Metro Group, kindly corrected by spacehunt - 17/7/05) has circulation figures of about 300,000 copies per day (figures provided by HKABC).


3) Does it work for Hong Kong? What implication does it have on the HK media industry?

(I deliberately put these 2 questions together because they are essentially the cause and effect of the same question)

Before we can assess these questions, we need to assess HK and the UK's newspaper industry sizes. Initially I was going to do this by revenue, but knowing that these media companies doesn't only work in the newspaper industry (others have different ventures somewhere else, which could contribute to their overall revenue); there's also the issue of cost and exchange rates, so I've decided to use newspaper circulation figures instead. All figure are from paid newspapers

According to figures published by the Guardian (registration required), as of April 2003, average daily circulation figures for mainstream paid newspapers (excluding local newspapers and free ones) are about 12.1 million copies; according to UNESCAP's (United Nations Economic and Socialcommissionn for Asia and the Pacific) published figures, as of 1995, daily newspaper circulation in HK amounts to 4.5 million (it's the closest complete figures I can find ). By circulation, HK's newspaper industry is about 2-3 times as small as UK's.

However there are data issues. I cannot find out where the UNESCAP based their figures on, and my UK figures had only counted the 11 most widely read newspapers in the country, given UK's geographic size compared to HK, the amount of local newspapers and their circulation could add to a substantial amount, so 4-5 times are a safer bet for me. I have tried to use more recent figures from the HKABC, however since Oriental Daily and Sing Tao, the 2 largest news companies in terms of circulation, had not joined this non-profit organisation, therefore I cannot gather enough figures (omitting those 2 missing news companies, daily newspaper for paid newspapers stands at about 810 000, which isn't a lot; either there are huge discrepencies between the UN and HKABC figures, or the market had shrunk since then).

Given that UK's population is about 60.4 million (from Google, just type UK population), and HK's population is 6.8 million (from People's daily Online), without even doing any mathematics, and ignoring factors such as multiple newspaper buying, one can safely say that the HK newspaper industry is very strained already, thus with a higher risk of saturation.

So, will it work? Well, if this question was based purely on circulation figures, then I can say that free newspapers DO work. Take Metropolis Daily for example, 300,000 per day circulation is a very impressive figure, ok so it's only 1/3 of Metro, but locally that's still as much as the number of papers Apply Daily sells per day, even if the newspapers are free, with that amount of circulation, advertising revenue can be quite substantial to make the business worthwhile. Therefore, if Sing Tao's free newspaper can actually distribute the same number of newspapers, then it works.

I believe that there's a market, even in HK (however strained it is now), for free newspapers, but I also believe that other news companies will quickly follow suit. The only thing HK entrepreneurs are good at are fucking copying each other, or copy strategies from abroad. Remember, Metro (corrected 17/7/05) is the company that kicked started the free newspaper trend in Hong Kong, but in the foreseeable future, when all the other company follow the trend, I believe that either:

a) The traditional paper market will shrink, or;
b) The free paper market itself will shrink, or;
c) Both markets shrinks, or;
d) Nothing happens, people happily absorbs the fact that they now have more choices, and will buy multiple newspapers.


Surprisingly, like tabloid newspapers, free newspapers in the UK and Europe can fit in well into the newspaper industry because not only from my observations, but researches had shown that readers do indeed get more than one newspaper - the one free/tabloid, one quality newspaper combination being the most common. It is this multiple paper buying that allowed the free newspaper market to develop. Pick up a quality newspaper, pick up a tabloid one, and pick up a free one; essentially they are two different entities (what they report on are quite disimilar), therefore there's a higher chance that people will buy both the quality and free paper due to difference in content, and most of all, the other one is free. Again, it's the 'harmless' factor.

However, I would like to state that in HK's case (especially This Sing Tao free paper) it's a little different. Metro (or Metropolis Daily) is one company that dedicates solely to publish free newspapers, however Sing Tao already has a paid newspaper, therefore for them doing another newspaper is like expanding the company - well, Sing Tao's CEO claimed that the free newspaper is independent from their flagship paper, however, upon reading Florence's blog I see something different - because as far as she knows, they didn't actually hire anyone, just kicking people from one paper to the other. That's hardly expanding the company is it? How independent can it be, if you get the same journalists who wrote Sing Tao Daily to write the free paper?

Also, countries like UK has clearly defined market for different classes/target groups, that's how Metro fit in - it has a clearly defined target group, and it's aims and objectives are clear. In Hong Kong this isn't the case - the Tabloid market IS the traditional market, or their boundaries are so blurred that one cannot clearly define the two separately - so who are they aiming the free paper at really? Their own readers? But the contents are no different! Readers of other papers? If they are reading the other papers, what makes them want to read this watered-down version of a paper that they don't like now? People who doesn't read newspapers? It may lure them because it's free.

Also, their marketing stratagy becomes important as well, since HK is a very small place - Metropolis Daily suceeded because they chose to distribute within MTR, the biggest train network in HK where millions ride it twice a day; however this right to distribute is exclusive, therefore Sing Tao and future papers have to go somewhere else - rumour has it that anthoer upcoming free paper am730 had already negotiated their exclusive distribution rights with KCR, the train company with network half the size of MTR. The 2 most lucrative distribution channels had already been taken, so if you don't know already, Sing Tao distribute their free paper the traditional way - newsagents (convenience store for you Americans) throughout Hong Kong. I'm afraid that's the best they can do so far, but it seems strange to me that they haven't tried on buses, minibuses or their stations at all; those two distribution methods can be very lucrative as well.

Interestingly, the opening statement of Sing Tao's new paper, they claimed that this paper won't rely on their only source of income - advertising revenues! What a load of bullshit, without even shit to eat, how will that paper survive? I wonder, I will just have to wait and see - sooner or later they have to start putting up more advertisments, or just scrap the whole thing; I believe that's just gimmick to try to lure the masses in because most of them probably wouldn't understand the reason for doing free newspaper is for the advertising revenue, informativeness only comes second.

I have stressed before that traditional newspapers in HK have absolutely everything in it, this is not a good sign, and in this case, when the free newspapers are not much differences, or even no difference from their traditional counterpart - it's basically the traditional Sing Tao Daily and it's free, watered down version - I believe that consumers will choose to buy either one of the other, especially when they share the same distribution method (this is point a); if we also take into account the credibility of free papers is that they are free, then there's a possibility that people will only get the free one in the future - if the contents of the free papers are no different from the paid ones, why bother buying the paid ones? Free ones are free!

Points b & c are simpler to explain - if the market becomes so saturated after the emergence of these free newspapers (I assume that other companies will follow this trend), and massive profit loss incurred because of heavy competition, and where their own products are mutually conflicting, then the companies may end up not bothering with free papers anymore. This may or may not cause ripples within the free paper market itself, effecting independent papers like Metropolis Daily, depending on the loyalty of their readership.

Point d is what already happened to the newspaper market in the UK, Europe and the US, but since HK's case is different, therefore if Sing Tao really wants this free market to become a worthwhile source of future revenue, then what the company must do, is to revolutionise their traditional counterpart (to give it a bit more quality) at the same time as they publish their free papers; otherwise when others also publishes their free counterparts, the whole market will only go downhill. Either way, the free market won't be here, in Hong Kong, for very long, and will be eaten by these locusts.

According to this blogger, there's not much difference between the paid Sing Tao and their new free paper (Chinesee only). That's a worrying sight.

Finally, one thing that interests me is the fact that how do you have competition when the product is already free? You can't slash prices anymore, if the competition gets so big that revenues/profits shrinks to the point of oblivion (due to higher costs like advertising etc.), then how can profits be made in such environment? Cutting advertising costs for customers? Cutting the only form of revenue? Then this is surely a vicious circle that is doomed to failure.



(This was written in quite a hurry as you may or may not gather, so I didn't think it through that much. Anyone who wants to correct me, or have anything to say, please feel free to leave a comment)

Update 15/7/05 0947 GMT - I reviewed this piece, and made a few amendments to it. By the way, most of the links of other blogs I posted here are in chinese, so if you can't read them, it's best if you don't bother.

Update 17/7/07 1102 GMT - Thank you Spacehunt again for correcting me, and I have also added more points into the article, they are in blue for your convenience.