The crucible of print

BY MOST conventional measures, Britain's newspapers look doomed. Young readers are abandoning them for the internet and television. The Daily Express and the Daily Mirror, both tabloids, have shed about two-thirds of their circulation since the mid-1980s. Yet Evgeny Lebedev, co-owner of the Independent and the Evening Standard, is optimistic. “People are hailing the death of newspapers,” he says. “But if you go into the Tube, you'll see almost everybody is reading one.”

Britain's newspaper market is the world's most savage. It is unusually competitive: there are nine national daily papers with a circulation of more than 200,000. And advertising has migrated online more quickly than elsewhere. Since 2009 more advertising money has been spent on the internet than on newspapers, according to ZenithOptimedia, a marketer. British papers receive no government funding (as is the case in France, for example). Indeed, they face a fearsome state-sanctioned competitor in the BBC.

Fierce competition has created a scrappy, sometimes immoral trade. This week the News of the World, a tabloid that has been caught up in a celebrity phone-hacking scandal, revealed it had suspended an editor. But Britain's papers are also exceptionally innovative, busily testing new format sizes and prices. Paul Zwillenberg of Boston Consulting Group says they are now experimenting in dramatically different directions. There are three main trends.

The first is being driven from Wapping, London home of News Corporation. Its four British titles—the Times, the Sunday Times, the Sun and the News of the World—are moving behind an exceptionally tough online paywall. Unlike the Wall Street Journal, also owned by News Corporation, the Times does not allow people to read any articles free on the web. Its prices are steep: £2 ($3.10) per week after the first month.

Not worth the paper they aren't reading

As online commentators and rivals have gleefully pointed out, News Corporation's paywalls have led to a drastic drop in traffic. A survey by Mark Oliver, a consultant, finds that only 14% of regular Times readers and just 1% of non-regular ones subscribe to the website in some form: upon hitting the paywall, most head for the BBC's free website instead. That does not worry News Corporation. It sees online advertising as an unreliable source of revenue. Online ad spending is growing, but the number of ad slots available is rising much faster; as a result, prices are so low that a reader who visits a website once or twice a month is hardly worth having. The firm would rather extract more money from dedicated readers directly.

Thus the pages of the Times and Sunday Times are thick with in-house ads offering entertainments to readers, from iPad applications to theatre tickets and Italian holidays. Some 250,000 people buy from the Times wine club. These things tend to make money, but the main goal is to hook readers on a bundle of services. Katie Vanneck-Smith, chief marketing officer for News Corporation's British papers, wants to get to the point where a newspaper subscription is like its pay-television or mobile-phone equivalents: something it hurts to cancel. Rivals fear the firm will bundle newspapers with BSkyB, a hugely successful satellite broadcaster that it controls and wants to take over completely.

Britain's second great innovator takes the opposite view. The Daily Mail contends that online advertising works fine—if you are huge. The paper has been one of the most consistent sellers in print over the past few years, crushing its nearest competitor, the Daily Express. But it is even mightier online. With 35m unique visitors each month, it is now the world's second-biggest newspaper website, according to comScore, which measures online traffic. It may take the top spot when the New York Times goes behind a paywall this year.

In contrast to the paper, which is conservative and often alarmist, the Daily Mail's website is a breezy read. It is big on celebrity news, particularly reports involving attractive women in swimsuits. Lots of online news aggregators link to it. Executives claim that the website is now so successful that it competes not with other newspaper websites but with portals such as Yahoo! and MSN.com. The Mail is now steering readers to its iPhone application.

Perhaps the most counter-intuitive strategy is being pursued by Mr Lebedev and his father, Alexander, a Russian tycoon. In the past two years they have acquired the Independent and the Evening Standard, a London paper that they have made a freebie. In October they launched i, a cut-down Independent, priced at 20p—one-fifth the price of most quality daily newspapers. It is the first new national paper since 1986.

Not one of the Lebedevs' British papers has a compelling website. They think young people do want to read newspapers—they just don't want to pay much, or anything, for them. The Evening Standard's circulation has more than doubled since going free, to 700,000. Distribution costs have plunged. Papers are now handed out in central London and moved around the capital by Tube: because they are free, commuters often leave them on trains.

The Independent and i face a harder road. Because i is so cheap, newsagents make little money from sales. They often shelve it with bottom-feeding tabloids and the Racing Post. Yet i is an intriguing effort to prop up the Independent, which was nearing the point at which marketers were losing interest: now advertising often runs in both papers, which together offer a higher circulation. It costs little to assemble and may help keep alive the newspaper habit, by offering a halfway house between free and premium papers.

The strategies being pursued by News Corporation, the Daily Mail and General Trust and Lebedev Holdings rest on distinct assumptions about what readers want, what they will pay for, and the future of advertising. It is highly unlikely that all three experiments will work. It may well be that none of them does. But none can be faulted for lack of boldness.

The innovators also exude more confidence than others. The Guardian, which first championed a big, free online presence, has been overhauled by the Mail's website. It lacks News Corporation's expertise in bundling and is far more expensively staffed than the Lebedevs' outfits. It is a measure of how quickly things are moving that the newspaper closest to the cutting edge a few years ago now seems most in need of a new strategy.