Free dailies: Not such a bright light in the newspaper industry

I know that Chris Anderson has a book to sell all about how free is great, but his post on "Free Dailies: The one bright light in the newspaper industry" really does make the mind boggle.

Chris claims that the ever-expanding circulation of free newspapers makes them a bright spot in a gloomy industry, even suggesting jokingly that PaidContent.com ought to change it’s name.

There’s one problem: while the circulation of free is growing, its ability to make profits is at best unproven and at worst demonstrably low. Metro, which publishes in 150 cities worldwide and claims 20 million readers, continues to lose money, cut jobs, and was even rumoured to be looking at selling its US operations at one point earlier this year. The US operations are rumoured to have lost around $10 million last year.

Meanwhile, Rupert Murdoch is gloomy about the future of US paid newspapers. However, he’s not gloomy about their continued existence – he just thinks that profit margins will have to fall from their current figure of circa 30% to a "mere" 10% – the kind of profit margin that’s currently a dream for free newspapers.

So, where’s the bright spot again?