Next on his list? Taking the free magazine idea around the world

Mike Soutar has built a unique publishing house in three years. He plans two more titles and a foreign adventure, writes Ian Burrell

There are few traditional media success stories around just now, but ShortList Media is unquestionably one of them and will remain so for at least as long as its financial backers have wives to put on the covers of its magazines.

Within three months of the launch of the company's national women's weekly, Stylist, the other halves of investors Kris Thykier (the film producer married to the television presenter Claudia Winkleman) and Matthew Vaughn (the film director married to the supermodel Claudia Schiffer) have graced its front page. How many more Claudias have they got?

But we shouldn't mock. Stylist is expected to register a first Audit Bureau of Circulations sales figure of 400,000 next month, while its male counterpart, ShortList, which was launched two years earlier, now distributes more than 510,000 copies in 11 British cities from Brighton to Aberdeen. Three years ago, the company comprised five people and a business plan; now, it's a publishing house with a staff of 56, hoping to launch two more titles and turn the company into an international concern.

Outside on the street, there is a clatter from the hooves of horses emerging from the local police station opposite the windows of the narrow building in Bloomsbury, central London, where ShortList Media is based. Of the various experiments with freely delivered and well-produced –"freemium" – content, this is one of the most compelling. According to the company's chief executive and founder, Mike Soutar, it's already turning a profit, six months ahead of schedule.

Each title has a signature columnist: Danny Wallace for ShortList and Dawn Porter for Stylist. The men's publication attracts advertising for mobile phones, cars (Mini, Ford Focus), watches (Citizen) and beer (Beck's, Grolsch), though few really high-end clients. The less-established Stylist carries ads for Dorothy Perkins and Galaxy chocolate. Both magazines have been happy to hide their covers within wraparound advertisements for Google.

Speaking in a café close to the office, Soutar, 43, seems convinced he has cracked it. "We are very optimistic that we've built an approach to publishing and distribution that's sustainable and will make good returns," he says. "We had a hypothesis that if we did all this [groundwork] in the first place we'd find it easier to launch more brands into the market. I think there are probably two [more] brilliant ideas that would suit the 'freemium' approach to editing and publishing that we have."

I suggest that a features-based business lifestyle title might be one, and he doesn't disagree. "I think that's certainly an area you could say is not at all well served by existing consumer magazines yet," he says. "We are moving into a completely new era in terms of the way people view work, where people are having to become far more self-sufficient and entrepreneurial. I think that's an interesting area to look at."

With the big publishing companies trying to restructure in the face of falling sales at news-stands, he knows ShortList Media has an opportunity to make gains while competition is weak. "Everyone else has enough on their plates to deal with, with downsizing and recreating their businesses."

As a board member at IPC Media, Soutar was involved with the launch of the men's weekly Nuts and the celebrity and television titles Pick Me Up, TV Easy and Look, and worked on international brands. He wants to take his ShortList model overseas. "When you look at what we are doing, there is no one else in the world doing it, there isn't one in the States, there isn't one in central Europe – the potential is there. I think we have one or two brands and a business model that I could see working in other parts of the world."

Soutar, whose industry reputation was partly based on having reinvented struggling Emap titles Smash Hits and FHM in the Nineties, left mainstream publishing in 2006 to set up a consultancy, Crash Test Media, aimed at advising publishing companies on launching new titles. But there aren't many new launches these days, and in 2007 he turned his attention to his gut feeling that there was a hole in the market for a men's weekly magazine, given away free to commuters.

Looking back, he admits he and his four partners – including the current editorial director, Phil Hilton, and the managing director, Karl Marsden – were extremely fortunate. "We were raising money in May time, and by October the storm clouds had gathered. Six months later, advertisers were really starting to pull back. Our timing was good and we were lucky – if we had dithered, I don't think we'd have done what we've done."

The debate over freely distributed print content has never been so fierce. Rupert Murdoch, as he moves towards charging for online content, has closed down his giveaway thelondonpaper. The Manchester Evening News, owned by Guardian Media Group, has scaled back the number of copies it hands out for nothing. Soutar, naturally, is on the same side of the argument as the London Evening Standard, which has more than doubled circulation by dropping its cover price and going free. "There's a huge generational difference between older consumers and those under the age of 30-35, who have grown up with the internet and the expectation that they will get high-quality entertainment and won't have to pay for it."

It also helps to reduce the power of supermarkets, which have "a stranglehold over magazine distribution", he says. "You are never allowed to sell out, because they never want to see an empty shelf, so you have to print lots more than you know you will sell. A good efficiency is 65 per cent [sold] of what you print. With ShortList, our efficiencies are over 90 per cent. Our wastage levels are lower – and print and paper are the things that cost you more than anything else."

He says he has big plans to develop his brands for handheld devices, secure in the knowledge that he has no cover price to undermine.

Some 55 per cent of copies of ShortList are delivered by hand on Wednesday evenings and Thursday mornings. The other 45 per cent are direct distribution into workplaces, gyms, and retail partners such as French Connection. The average age of the readership is 30, and 86 per cent of them are ABC1s. The man who launched Nuts claims that females (16 per cent of readers) will start picking up ShortList in greater numbers. "There isn't the barrier that exists with a men's magazine that has a lady on the cover struggling to get out of her brassiere."

He also claims that Stylist, which is distributed on Wednesdays in six cities, has a unique editorial offering. "It wouldn't use exploitative photographs of celebrities and put rings around their cellulite or speculate on the love lives of Brad and Angelina. We knew we needed an intelligent and thoughtful magazine which would be empowering and useful for women," he claims, citing the popularity of a feature on Norwegian legislation that promoted proportionate numbers of women to company boardrooms. In reality, the magazine, edited by Lisa Smosarski, is focused primarily on fashion and beauty.

As for what this publishing newcomer launches next, Soutar claims to offer a guarantee that it will not replicate anything currently available. "I don't do 'me-toos'," he says.