JIM LEHRER: Now, the rise of the free newspaper. The Newspaper Association of America reported today that circulation among major U.S. paid newspapers fell 1.9 percent in the six-month period ending in March, one of the steepest declines in recent years. The freebies are among the factors in changing the overall newspaper landscape. Media correspondent Terence Smith has our report.
EXPRESS DISTRIBUTOR: Express Daily. Have a good day, now. Thank you.
TERENCE SMITH: They just can't give them away fast enough.
EXAMINER DISTRIBUTOR: Examiner.
TERENCE SMITH: There is a new kind of newspaper war underway these days, a competition among freebies, or freely distributed newspapers. They are popping up around the country.
And if they succeed as a business model, they have the potential of turning the traditional notion of paying for newspapers on its head.
JOHN MORTON: Newspaper readers are dying off faster than they're being replaced. People who use the Internet have been conditioned not to pay for what they get.
TERENCE SMITH: Newspaper analyst John Morton says in the past few years, publishers of traditional dailies have recognized a problem: While they are still turning a healthy profit, often more than 20 percent, they're hemorrhaging readers.
JOHN MORTON: We're not reaching all of the market and we're losing it, to whatever, and we've got to do something different to try to grab these people.
DISTRIBUTOR: It's free, it's fresh.
TERENCE SMITH: Publishers across the country are trying to capture the disaffected or non-reader by producing free papers, supported solely by advertising: From the Metro Corporation papers in Philadelphia, Boston, and New York, to the Red Eye in Chicago, to Quick in Dallas, to the Colorado Daily in Boulder, to the Denver Daily News to Today's Local News in San Diego, to the San Francisco Examiner, and others.
EXPRESS DISTRIBUTOR: Express Daily.
TERENCE SMITH: In the nation's capital, two relatively new free papers have hit the streets: Express, a commuter daily spun off by the 130-year-old Washington Post two years ago, and the Examiner, a six-day-a-week paper started last year by Denver multi-billionaire Philip Anschutz.
The Examiner has extended its reach by delivering the paper to the doorsteps of residents in some of Washington's middle and upper-middle income households. Both Express and the Examiner use the tabloid-style layout.
Express, slightly smaller in format, has about half the number of pages as the Examiner. Express is currently giving away 180,000 copies and plans to increase its run to 200,000. The Examiner is currently distributing about 260,000 copies.
JOHN WILPERS: This could be the biggest thing in newspapering since USA Today. We're going to create newspaper habits and it's going to be good for reading, it's going to be good for democracy.
TERENCE SMITH: John Wilpers, the editor in chief of the Examiner, is a believer in free newspapers. Under his direction, the Boston Metro doubled its circulation to 500,000 copies. He became the founding editor of the Examiner last year.
JOHN WILPERS: The mission is to give readers whose lifestyles have changed radically in recent years, to being very, very busy people, to give them enough information to get through their day, so that they feel informed of what's going on, most importantly locally, but also in the nation and the world and business and so on and give it to them in a way that respects their lifestyle.
TERENCE SMITH: Dan Caccavaro founded the Boston Metro before starting Express from scratch in Washington. He says Express, with a staff of 15, serves as a digest, relying mostly on wire services such as the Associated Press. While one of its purposes is to attract readers to the Post, its coverage is different.
DAN CACCAVARO: It really has made no sense for us to take, you know, an intricately crafted Post story and boil it down just the essence in 200 words when we can get that from the Associated Press and hopefully steer people who want more to go read that original content in the Post.
TERENCE SMITH: Express is specifically targeting 18-to-34 year-olds who are in a hurry. Olivia Kwok and Stacie Feldman take the metro to their jobs in a law firm downtown each day. They say Express fits their needs.
OLIVIA KWOK: It's kind of just like the Cliff Notes, which is what I enjoy, because sometimes when you get the paper it's just too bulky and I don't really, you know, want to carry it on the metro.
STACIE FELDMAN: I read the Post usually more on the weekends, that's why when I get on the metro I like just to have a quick, you know, summary of what's going on.
TERENCE SMITH: By contrast, Examiner readers tend to be older, from their 20's to their 50's.
CHRISTINE SHATTUCK: Express is, just, seems to me like a tease. They'll give you some things. I've looked at the Express, and I've not that interested in it. The Examiner gives you, at least, stories and a lot of local stories.
TERENCE SMITH: The Examiner, with a staff of 54, focuses on its own local news reporting as well as stories from the New York Times and AP and the Christian Science Monitor.
TERENCE SMITH: While the Express has no editorials, the Examiner's have a distinctly conservative tilt, which apparently reflects the views of the owner.
JOHN WILPERS: Mr. Anschutz has identified a couple of key areas that he believes are important for us.
TERENCE SMITH: Namely?
JOHN WILPERS: Namely, tort reform, gay marriage and there is maybe one or two others.
TERENCE SMITH: I'm gathering from you, he has laid down some of his own ideas?
JOHN WILPERS: I've learned a long time ago that the person who buys the ink has the right to say where the paper ought to go. And I think it makes it a more intriguing, compelling paper.
TERENCE SMITH: John Wilpers thinks there is a profitable niche for a paper that leaves hungry readers satisfied, but not stuffed.
JOHN WILPERS: People right now are so damn busy -- the Post is a wonderful newspaper, but it's just so damn big that not everybody can get through it.
TERENCE SMITH: Karen DeWitt is a veteran of the New York Times and USA Today and now oversees the Examiner's D.C. staff. She sees beyond the Express and wants to take on the Post.
KAREN DeWITT: We're going to take their lunch. We're going to take their lunch from them, because I tell you, this is the wave of the future. We're now on a 24/7 news cycle. You're driving your car to work, you hear about international things, so we don't really need to cover that as much. We're looking for the stories that people aren't seeing, that are just as important.
LEONARD DOWNIE, JR.: The Examiner is still something of a mystery to me. I see it as competition either for Express, our free newspaper, or for the Washington Post itself.
TERENCE SMITH: Len Downie is the editor of the Washington Post, which has lost a startling 10 percent in circulation over the last two years, three times the industry average nationwide. Today it sells around 700,000 papers daily, around a million on Sundays.
LEONARD DOWNIE, JR.: The whole purpose of the Express, which we know is very satisfying to its younger reading audience, is that it doesn't take long to read, about the length of a subway ride and it gives them the top of the news.
What we're mostly interested in and have succeeded so far according to our surveys of Express readers, in making into Express readers people who were not previously reading a newspaper. And I hope in the long run that it'll translate then from Express into also reading the Washington Post.
TERENCE SMITH: Len Downie says his company's growth area is online, where washingtonpost.com has attracted about a million new readers to the paper.
LEONARD DOWNIE, JR.: As editor of the ink-on-paper Washington newspaper, I am not worried how people receive our news as long as they're receiving it.
TERENCE SMITH: And paying for it?
LEONARD DOWNIE, JR.: And well, paying for it one way or another.
TERENCE SMITH: Dan Caccavaro of Express says there are a lot of myths about free newspapers and there's room for many sources of news.
DAN CACCAVARO: We're showing that they can that we can coexist with the major dailies. I think some of the fear of these papers is based on a false premise that it's an either-or proposition, that either the rise of these newspapers somehow means the decline of a major daily, you know, or that we're dumbing down the news.
TERENCE SMITH: Analyst John Morton says Washington will pose a real test for the Examiner, Express, and the business model of free newspapers buttressed by advertising.
JOHN MORTON: Washington is probably the worst city to try to start up a daily newspaper because of the level and quality of the competition and the dominance of the Washington Post. And it may be that they figure if they can make this work here, they can make it work anywhere.
TERENCE SMITH: In fact, should the Washington Examiner be successful, taking that model to other cities may be the plan of owner Anschutz.
He recently bought the San Francisco Examiner and has copyrighted the Examiner name in 67 other cities. Still, while there are indications that both Washington papers are gaining attention from readers, their future remains uncertain.
JOHN MORTON: The rule of thumb is six to eight years, to turn the corner into profitability.
TERENCE SMITH: So, if newspapers are the "first draft of history," the growing newspaper war in Washington may be the first draft of the free newspaper story.