As consumers have increasingly turned to television and the Internet for news, the circulation of paid newspapers has declined—by 2 to 4 percent annually for more than a decade in most developed markets. The trend is set to continue, particularly as growing broadband penetration encourages the wider use of online media. In addition, free commuter tabloids, available in many big European and US cities, have lured away some paying customers. As a result, the revenues and profits of traditional newspapers are under intense pressure.
Newspapers have fought back with free subscription trials and other promotions, with advertising platforms such as new or expanded feature sections, and with better home and newsstand distribution. But struggling publishers often seek the quickest method to cut costs and increase circulation without harming ad revenues. Many, particularly in Europe, see their salvation in changing formats: they believe that switching to a more compact one, such as the tabloid format, may lift circulation by attracting disaffected newspaper readers, particularly teens and women. Higher circulation, in turn, stimulates demand for advertising, so newspapers can raise their ad rates. In some cases, the price of the newspapers can rise as well.1
Several important broadsheets across Europe have...