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Summary:

Updated to include Newsday’s response. It sounds like Newsday is fulfilling at least one part of its paywall plan: not selling online subscr…

Newsday Screenshot2

Updated to include Newsday’s response. It sounds like Newsday is fulfilling at least one part of its paywall plan: not selling online subscriptions. Sure, subscriptions are available but unlike the New York Times Co. (NYSE: NYT) or others who are looking at various pay models to raise income, the real emphasis has been on creating additional value for the services Cablevision (NYSE: CVC) customers already get and improved engagement with local subscribers. Newsday print subscribers and Optimum Online subs automatically get access; everyone else has to pay about $260 a year. Today the New York Observer reports that only 35 online-only subs have signed up in the three months outside access shut down — under-the-basement low.

Up front, I don’t see any way this speaks to how other online pay plans will work, unless others are set up to minimize online subscriptions and make it more difficult for anyone but local users. It’s not close to a test of what might happen to the New York Times, which will keep free access for home delivery subscribers when it goes to a metered system in early 2011 and will tailor plans to encourage online subscription. NYTimes.com also plans to keep much more access available — increasing its marketing and advertising opportunities.

But the 35-sub result is about as mind numbing as the Knicks’ 50-point loss to the Mavericks Sunday. (Yes, Newsday and the Knicks are both run by the Dolans.) The number emerged, according to NYO‘s John Koblin, during a newsroom staff meeting with Publisher Terry Jimenez last week. When he was asked how many people had signed up, Jimenez asked another exec who said 35. The reporter who asked the question checked his facts: “‘I heard you say 35 people,’ he said, from Newsday‘s auditorium in Melville. ‘Is that number correct?’ Yes, indeedy. Five staffers Koblin talked to said Jimenez added: “That’s 35 more than I would have thought it would have been.”

Jimenez also told the staff the redesign and relaunch cost $4 million; Newsday lost $7 million in the first three quarters. If the subs are paying the full annual amount, they’ve sold about $9,100 worth. We could take it further and divide $4 million by 35, which would be fun but not quite fair. We already knew that outside access was going to drop — and it has. Again, not a great measure of might happen to other sites unless equally draconian.

Newsday Editor Debby Krenek told me when the wall went up in October, it was all about local engagement. Cablevision claims to cover about 75 percent of Long Island households through Newsday or Optimum. Local readers, she contended, “are more engaged, they spend more time on it, view more pages. If we provide information, things they want and will be engaged with, it will make up for the out-of-market traffic.” Newsday hopes that plus some interactive services will boost the site’s value to advertisers who want to reach those local readers.” If that is happening, then the subscription adds can be brushed aside just the way it seems like Jimenez did in that meeting. (Newsday‘s response is below.)

Either way, following whether this works or not as an example of what might happen at other papers is starting to look like predicting other basketball teams by using the Knicks.

Meanwhile, there’s a gaping hole in the wall called mobile.newsday.com.

Updated: Newsday‘s response via an e-mailed statement doesn’t challenge the report: “Millions of Cablevision customers in the New York tri-state area and 75 percent of Long Island households, including all Newsday home delivery subscribers, now have exclusive access to newsday.com at no additional charge. Internal research shows that Newsday‘s web site is an extremely popular new benefit to hundreds of thousands of Long Island Cablevision households. Given the number of households in our market that have access to Newsday‘s web site as a result of other subscriptions, it is no surprise that a relatively modest number have chosen the pay option.”

Newsday also provided some stats, saying that the *comScore* numbers have increased monthly since November, with local uniques at 607,000 in December. That’s compared to 649,000 in April and 672,000 in May. The company says users are returning more frequently and that 67 percent of post-launch traffic is from the DMA, up from 53 percent for the first half of 2009.

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  1. Staci, this is some good coverage that puts the information in perspective. Well done. We are already seeing the “anti-paywall” contingent latching on to this bit of information in an attempt to support their position — Alan Rusbridger of the Guardian gleefully tweeted the 35 subs number almost as soon as it came out. If we are to have a useful discussion about the benefits and the risks of paid content efforts, we need to be willing to understand what’s really going on. Your article helps.

  2. Interesting and useful. If the real business model is to sell cable access, are they saying how that’s doing? At $100/mo or so for typical CableVision customer, that’s a lot more $ than any pay-the-publisher-for-content model you are likely to see. Apple gets paid for iPods, Amazon for Kindles, no matter how much or little they charge for the content, maybe there’s something to this “pay for the device” or “pay for access” rather than the content.

  3. 75% of LI households get free access because they have cable. 25% of the target market doesn’t have cable. If you exclude print subscribers (who also get free access) how many hundreds of thousands of people are left, who could be considered potential customers for Newsday’s online service?

    How many former LI residents are there living in other states, who could also be potential customers?

    How is the paid service being marketed?

  4. According to Nielsen, “In December, the web site had 1.5 million unique visits, a drop from 2.2 million in October” 500,000 uniques is a huge price to pay, IMO That could be up to 5,000,000 page views per month. If they were selling ads on a CPM model, only a tiny $10 / page CPM would cost them $600,000 a year in lost revenues. If Cablevision subs already had access to the whole website anyway, what has Newsday really gained? Are they really going to be able to increase advertising rates behind the paywall by that much? Are they going to try their hand at direct response marketing to those behind the paywall? Is access to Newsday’s website really that strong of an inducement for one to spend $100 on their cable content?

  5. Is today’s Newday worth $5 a week? What is left of the once proud paper? I can attest to what is gone. I worked for Newsday for 25 years when there was Kempton, Breslin. et al..

  6. Craziest Gadgets Thursday, January 28, 2010

    2.7 million people on long island. 25% are not cablevision/newsday print subscribers- that’s 675,000 people. Of those 675,000 people, 35 signed up. Which is surprising since they are charging $5 for online access that’s free with a $4.50 print subscription.

  7. Scott Bateman Friday, January 29, 2010

    JB’s point is excellent. Most newspaper sites that try paid access go through the exact same experience — a major drop in audience, ad inventory and ad revenue. That’s the main reason why they abandon the effort.

    It also opens up that site to competition that provides free access to content. TV stations in metro markets are getting much more aggressive in building out online content and writing more Web-only articles. Having worked for both TV and newspaper Web sites, I can tell you that TV stations love to see newspaper charge for access.

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