Is this what happens when your business model is based entirely on free, ad-supported content? Sales at European freesheet publisher Metro International fell 8.6 percent to €81.5 million in the three months to June 30, and the group swung from a €1 million profit to a €1.9 million loss. CEO Per Mikael Jensen acknowledged “the advertising market is responding to gloomy economic news around the world” but blamed US currency differences and poor results in Spain, the US, Denmark, Portugal and Canada - the only units not to show a profit: “This is a commendable result in difficult market conditions.” It will cut costs, and concentrate on Asia, south America and Russia.

SEE ALSO: Schibsted Buys A Third Of Metro Sweden - Tipping Point For Freesheets?

In online this quarter, it recorded a €900,000 loss, after spending €400,000 per quarter in development, launching a Spanish site to complement its French roll-out. Total online investment to date is now €2.6 million. French online revenues rose 234 percent in the first five months of 2008 thanks to the new site.

They say, in a recession, advertising is first to bite the dust - something that could leave freesheets particularly exposed. Still, Scandinavian publisher Schibsted‘s 350 million kronor (£30 million) purchase of 35 percent of Metro’s Swedish business is going ahead, subject to regulatory approval, and expected to complete in the fourth quarter, resulting in the pair forming a joint ad sales unit across both paid-for and free.