Good research paper from Scarborough Research on the impact of free newspapers on paid newspapers in several US cities. Packed with valuable information anyone involved in the newspaper business will find useful, this paper provides perspective we will be able to draw on as more free newspapers develop in Australia. Publishers of free newspapers will point to the research saying that they are not cannibalising paid sales. True. The paper also talks about the decline in paid sales circulation.
Toward the end is this which sums it up for me:
So, the emergence of free dailies does not yet address the very critical issue of why readers are defecting from
traditional print newspapers. Moreover, neither is the free daily going to solve the circulation declines.