No Money Down

By Janice Castro.

Not many companies can reap handsome profits by giving away everything they produce. But in the newspaper business, an enterprising group of publishers is doing just that. By relying solely on advertising revenues, their papers prosper without charging readers a cent. From the suburban Boston Tab (circ. 150,000) to Berkeley's East Bay Express (circ. 45,000), free newspapers, most of them weeklies, are finding lucrative editorial niches and providing a sprightly alternative to established dailies.

The free papers are usually distributed in carefully selected neighborhoods and shopping centers. Advertisers such as movie theaters, concert halls, groceries and restaurants use the free papers because they pay only for the type of circulation they want. New York City's Our Town, for example, goes to 121,000 well-to-do readers at all the best addresses in a 2.8-sq.-mi. area of Manhattan's Upper East Side. Thin on news content and partial to causes like raising funds for homeless pets, Our Town earned estimated revenues of $1 million last year and profits of about $150,000.

Many of the alternative weeklies have their roots in the counterculture protest papers of the 1960s, but like their readers, most of the editors these days are a bit more materialistic. The Phoenix New Times (circ. 130,000) was operated by a collective until Publisher Jim Larkin and Editor Michael Lacey bought the paper in 1977 after they had left the group. Now New Times has annual ad revenues of $6.2 million. Says Larkin: "We've gone from being a collective to being champions of free enterprise."

Free papers often try to complement rather than compete with big-time rivals. The Newton, Mass.-based Tab, which gives away most of its copies but also sells a few thousand on newsstands every week for 25 cents, leaves foreign policy and national affairs to the prestigious Boston Globe. Says Tab Editor Russel Pergament: "The key to our success is that we're relentlessly local." In most cases, free-paper editors carefully tailor their stories to readers' tastes. Berkeley's East Bay Express, which operates out of the former headquarters of the Black Panthers, caters to young urban professionals. One recent story: a 9,000-word investigative piece on a community opera group.

But some alternative papers are eager to take on weighty general-interest topics. Jay Levin, editor in chief of L.A. Weekly, is proud of his paper's coverage of Central America and environmental pollution. A 1980 series on smog in Los Angeles earned a citation from the California Newspaper Publishers Association. The North Carolina Independent, published in Durham, has made a reputation for itself by jousting with the state's powerful tobacco interests and big textile manufacturers.

Perhaps the king of free papers is Chicago Reader Publisher and Editor Robert Roth. He and eight others also publish a Reader in Los Angeles and are part owners of the East Bay Express and City Paper, a weekly in Washington. The papers brought in revenues of $9 million last year. While the Chicago Reader is now one of the most successful free weeklies, its founders could once barely afford to print a newspaper, much less give it away. In the early days, Roth and three college friends shared an apartment and put together the Reader on the dining-room table.

Other alternative publishers can tell similar tales. Phoenix New Times Editor Lacey once resorted to digging ditches and selling blood to keep going. But the hardships often pay off in financial and psychic dividends. "Being a small independent voice is fun," says North Carolina Independent Publisher Steve Schewel. So is making money by giving your work away.

With reporting by Charles Pelton/San Francisco and Elizabeth Taylor/Chicago