Morals of competition in newspapers

Chris Anderson looks at a free newspaper model that didn't quite work over at his Long Tail blog

He tells the story of

“Nyhedsavisen”, a new Danish daily newspaper hit the streets. The newspaper would feature an editorial mix prioritizing both prize-winning critical journalism and stories close to the everyday life of ordinary Danes.
The pricing of Nyhedsavisen was simple: it was free. And, as something entirely new: it was going to be delivered to the homes of all Danes – at no cost. Not only the newspaper itself was free, delivery was free as well. It was in effect “double-free”.

which was launched in October 2006.

The paper targeted three revenue streams in Denmark,the traditional one funded by advertisng revenue,the second being distribution of printed advertisement catalogues and brochures alongside the distribution of the paper itself.

The third was to act as a news wire to other Danish news outlets.

What happened is that the competition decided to fight back and the market was flooded with free newspapers,forcing the price of advertising down.

This free newspaper war went on for over two years and caused the entire industry to bleed. On top generally declining circulation for all (paid) printed newspapers the cost of producing and distribution additional free newspapers added significant losses to the financial results.