Just How Daring is the 'Newsday' Pay Wall Gamble?

By: Jennifer Saba While many newspapers across the country are still dithering about charging for online content, Newsday is one of the first major metros to do so. Thursday morning, Cablevision -- which owns the Long Island, N.Y. daily, said it would start charging $5 a week for access to Newsday.com for those who don't subscribe to the newspaper or its Internet service Optimum Online.

Cablevision looks as if it is making a daring play. Except when the fact is considered that combined Newsday and Optimum Online subscriber coverage is 75% of the Long Island market, according to Newsday, how daring is it, really?

Not very, according to Alan Mutter, a newspaper observer and author of Reflections of a Newsosaur. "It's not nearly as bold as an experiment as it appears to be," he said. Since Cablevision already reaches 75% of Long Island, there is a "much smaller risk of losing online traffic than the typical newspaper would."

Newsday can take such gamble thanks to Cablevision's online subscribers. If Newsday were to go this alone and not offer free access to Optimum Online users it would reach much less of its core market. According to Newsday's most recent Audit Bureau of Circulations Audit Report for the year ending September 2008, Newsday's average daily circulation covered 38% of Suffolk County and 36% of Nassau County.

Noted Ken Doctor, an affiliate analyst at Outsell Research and author of Content Bridges : "I think this is a one-off because of the unique nature of a cable company that owns a newspaper. I don't see it as a model that applies to anybody else."

What is interesting, said Doctor, is that Cablevision is essentially charging for access, not content. And it's using a model that is already very familiar to the newspaper industry: bundling.

The idea that people pay one price point for universal access is a different kind of mindset, said Doctor. The Wall Street Journal charges for mobile applications, for instance, but those who already subscribe to the print and online editions get free access.

"Otherwise the near panic about needing another big revenue source has subsided. I think people are sobered when they look at it and there is not a huge pot of money in paid content," he added.

Newsday.com had roughly 2.2 million unique visitors to its site in September, according to Nielsen Online. As a general benchmark, a metro newspaper Web site tends to receive about 50% of its traffic from outside its market, Doctor noted: "That traffic is going to dry up as soon as it hits a pay wall."

But on the flip side, if Newsday.com is pitching itself as the local news source of Long Island, it might be able to sustain the decline. Even if traffic declines, the Melville, N.Y., daily can emphasize to local advertisers that its Web site traffic is truly local -- and there's no waste, said Doctor.