7 Jun 2011

What would "free" distribution mean for Tanzanian newspapers?

Mozambique's free @Verdade newspaper, picture from guardian.co.uk
The (UK) Guardian published an article this week on it's Global Development website about @Verdade, a weekly newspaper in Mozambique that's distributed completely free of charge. The same paper has been the focus of articles in Time magazine and Think Africa Press as well. They give away 50,000 copies a week, and estimate their weekly readership to be around 400,000 people, making it the most read newspaper in Mozambique.

I'm not aware of any Tanzanian newspapers that are distributed free of charge. There are plenty of newsletters and the like, some of which are made to look like newspapers, but there's a big difference between a company, government department or organisation publishing a newsletter to promote its own work and a genuine newspaper trying to be profitable using without charging a cover price. Even Femina, publishers of Fema and Si Mchezo magazines, for which the vast majority of copies are distributed free of charge is not really using a free model as it's usually understood since it is funded by donors. Nor are they really news magazines.

Elsewhere in the world, "free" as a model for newspapers is gaining ground. In the UK, the Metro has always (I think) been a free paper, and others are experimenting with the same and similar ideas. So if it can be made to work in the UK, and even in Mozambique, why has nobody made it work in Tanzania?

In Tanzania, the two traditional sources of newspaper funding - sales and advertising - are supplemented for many (including Daraja's Kwanza Jamii newspaper) by subsidies from donors (such as TMF, as in our case) or from individuals or organisations and with the money and interest to pay for a paper from their own pocket.

But putting subsidies aside for the moment, any newspaper that's given away for free is gambling that increased circulation and readership will result in increased advertising revenues that will compensate for the cost of a larger print run and the lost sales revenues. Femina has shown how this could work - though advertising is currently peripheral to their subsidy-based business model, they can charge very high amounts for advertising because their readership is so high.

If Mwananchi, Majira, Tanzanian Daima or Nipashe were to go for the free option, their circulation figures would presumably increase dramatically, and they could perhaps even double the prices they charge for advertising space.

A (very unscientific) look at Mwananchi's business model suggests that they currently get just under half of their income from advertising (around 15m/- per day) and the rest (roughly 20m/-) from sales*. So a considerable increase in advertising revenues would be needed to compensate for lost sales. As a very rough calculation, they would probably need to triple advertising income in order to replace lost sales revenues and to cover the cost of printing and distributing more copies. That would probably require boosting circulation to over 100,000 copies per day as well as increasing the amount of advertising carried. It would not be easy.

What's more, "free" is also more complicated. The cover price is not only useful to newspapers as a source of revenue, but also serves two other purposes - to incentivise distribution and as a source of feedback on the paper's popularity.

"Buying" a free paper costs nothing, so people might pick it up to use as wrapping materials or toilet paper. So how does the editor know whether circulation is increasing because the paper is popular or because more people are finding it useful to wrap chips or mitumba?

And for newspapers with a cover price, some part of that cover price is kept at each stage of the distribution chain, so everyone has an incentive to run things efficiently. Distributors of a free paper need to be paid by the paper, and there's a risk that they could simply take the money and dump the papers in the nearest ditch. So a monitoring system is needed to make sure they don't, which is difficult and costly - Femina puts a lot of time and money into checking up on distributors, for example. And according to some of the comments on the Guardian article linked above, @Verdade in Mozambique has also had difficulty with this, with the result that the paper is currently only available in a few large urban areas. The same is true of the UK's Metro.

For Daraja's Kwanza Jamii, this is a major obstacle to a "free" model. We get only a very small amount of our revenue from sales, but we need the paper to reach remote areas, which would make distribution of a free paper very difficult and expensive.

But for Tanzania's national papers, for which the vast majority of sales are in a few large urban centres, the distribution challenge would be the same as for @Verdade and the Metro - challenging but not impossible.

So a free newspaper would not be easy. But that doesn't mean its impossible. And with a bit of creative thinking, I see no reason why a free newspaper couldn't be successful in Tanzania.

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* Advertising revenue is estimated on the basis of the number of adverts in three days' issues and prices for advertising that are easily available from Mwananchi. Sales revenue is estimated on the basis of 40,000 copies sold at 500/- each.