IT MAY be this year, it could be next, but in the not-too-distant future the circulation of the Daily Mirror will almost certainly be eclipsed by that of Metro, the freesheet piled high at bus and Tube stations every morning.

For the Mirror, established in 1903, it is a sign of the times. Little more than a decade ago, it was the second-largest selling daily newspaper in Britain, behind The Sun, which is owned by News Corporation, parent company of The Sunday Times.

Then the Daily Mail nosed ahead in the sales war, buoyed by the expansion of middle England. Today the gap with the Mail, which sells 2.31m copies against the Mirror’s 1.51m, is 800,000 copies. The Sun shifts 3.21m.

Metro’s inexorable rise marks another milestone in the Mirror’s decline. But it also highlights the wider trend among younger readers who are becoming used to paying for few of their media products - be they newspapers, music or video.

Only nine years old, Metro, owned by Associated Newspapers, part of the Daily Mail group, had a circulation of 1.36m in January, a rise of 20% on last year after it increased its print run for London.

Some 150,000 copies short of the Mirror and now profitable, its bland editorial is distributed to young commuters in 16 cities, often in partnership with the region’s strongest publisher.

Sly Bailey, chief executive of the Mirror’s parent company Trinity Mirror for the past five years, is unperturbed that her flagship title may drop into fourth place.

“I am not sure that we do see Metro snapping at the heels of the Mirror,” said Bailey. “It’s an entirely different sort of proposition. We always look at our competitors but we are very focused on what we are doing.” Circulation has never mattered to Bailey. She pulled the Mirror out of the sales war several years ago, arguing that discounting and “renting readers” with expensive, cover-mounted CDs and DVDs did nothing for profitability and shareholders in the long term.

Rivals say she may have withdrawn from the battle, but the title has still been wounded by underinvestment and a limited promotional budget.

Bailey counters that her national newspapers - the Mirror, Sunday Mirror, The People, Daily Record and Sunday Mail - remain just as profitable as they were in 2004, despite a painful decline in advertising.

Under her, and editor Richard Wallace, the Mirror has been made over in subtle feminine tones. Curiously, that is how it began in 1903, when it was launched by Alfred Harmsworth, later Lord Northcliffe, whose family eventually sold out to concentrate on the Mail.

Long before it became a left-wing voice for the working classes, he envisaged a publication that would be “a mirror of feminine life”.

If that was the past, what is the future? While analysts say the Mirror’s prospects look cloudy, Bailey sees salvation in becoming more local and more digital. That should play to the strengths of the group’s regional titles, including the Western Mail and Huddersfield Daily Examiner.

Trinity may not favour discounting, but it sees a role for free newspapers of its own. Its latest launch is Business7, a business newspaper handed out to Scottish workers.

“We are interested in the free model; it is driven by consumer insight and is an important part of our strategy,” Bailey added.

And then there is the internet. At present this provides only 3.7% of group income, but Trinity has been acquiring websites to grab back some of the advertising spending that has drifted online. The latest is the Career Engineer.

The company claims to control 8.5% of all online recruitment advertising and is aiming to break through the 10% mark. Digital income is growing at 36% a year.

At the local level, Trinity Mirror is launching community websites largely filled with “user-generated” content submitted by readers. For example, on Teesside, where it owns the Evening Gazette, Trinity has put in 20 sites, each tailored to a particular postcode.

In an example of “reverse publishing”, some have even spawned their own physical parish-pump newspaper.

Admittedly, it is hardly gripping stuff and may take a long time to move the profit dial. But Trinity has no choice except to plough on after a strategic review shook the tree with vigour to see if a buyer for some or all of its assets would fall out.

Last year it offloaded the Racing Post and most of its newspapers in southeast England, but could not find a new home for its Midlands titles.

Bailey baulks when asked if she should be doing something more radical. “In our business review we explored all the options - a demerger for the national titles, for instance, which would have been radical but it wouldn’t have been right,” she said.

Stripping out exceptional costs and the disposals, operating profits last year edged up 3.6% to £186m on sales ahead by 1.6% at £932m.

The flat top line was accompanied by another cautious outlook for advertising - down 3% in January and February - underlining that the future for newspapers remains fiendishly hard to predict.

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