Blogger Alan Mutter, an editor turned venture capitalist, says that while the Chronicle’s circulation is plunging, the city now has two free dailies that have potential. There’s the Examiner, owned by billionaire Phil Anschutz, and earlier this month another daily started — called the San Francisco Daily.

“The S.F. Daily, whose initial press run was a mere 5,000 copies, is noteworthy, because it is being produced by the publishing duo who built the Palo Alto Daily News into such a formidable force that the San Jose Mercury paid a handsome price to acquire the free paper a few months before Knight Ridder was put up for sale,” writes Mutter on his Reflections of a Newsosaur blog.

“Can a city that seems to have forsaken its traditional paper successfully support a dueling pair of free dailies? Potentially, yes, because the two freebies are pursing different strategies. … The SF Daily, reprising the Palo Alto formula, is going after small, neighborhood retailers who have limited budgets to reach a limited trading area. It’s tricky to recruit the Mom and Pop advertisers, but, if the S.F. Daily is successful, it will own this rich, underserved market,” Mutter wrote.