Free dailies had attributed most of their success to the amount of time people spent in public transports, but are now facing the same problems as traditional newspapers: drops in advertising revenue and competition from other freesheets. They are particularly affected by declines in advertising since they rely heavily on advertising for their revenue.

Metro International SA, the biggest publisher of free daily papers around the world, which has a daily circulation of 23 million copies in 23 countries, had their revenue fall 6.1% to €73.4 million, or $116 million, in the first quarter from a year earlier.

"The U.S. market is probably the worst it has been since the 1930s for media companies," Metro chief executive Per Mikael Jensen said.

Metro is now cutting jobs (eliminating 27 jobs in January, leaving a staff of 100 in the U.S.), closing some papers, potentially selling its New York, Boston and Philadelphia papers to another media company, and trying to improve their Metro website, which was launched last month.

Jensen noted that "Metro made some mistakes in the U.S. by not expanding quickly enough into enough cities. As a result, it wasn't big enough to get the attention of major advertisers."

Another daily free paper that has been affected by financial reasons was BostonNOW, which shut down, even though its circulation was on the rise.

Source: Wall Street Journal (photo) through IFRA Executive News Service