Newsday’s pay wall: From bad to worse

By Steve Outing on Nov 9, 2009 in Business models

What’s wrong with this webpage I encountered the other day?

Besides the lack of wisdom of a general-interest newspaper (Newsday) putting a pay wall on its website for non-unique content (my opinion, shared by many other media experts), the worse part is that Newsday.com is leaving money behind. Double-dumb.

Here’s my experience:

I saw a Twitter post linking to this article; clicked through.
Got to Newsday.com teaser page with intro to story and a link to “VIDEO: See the Droid in action.”
Video seemed interesting, so I clicked.
Got to the page above, which gave me ONLY the options of subscribing (to the newspaper; to Optimum Online, a NY cable service; or to Newsday.com for $5 a week) in order to access the video.

Since I live in Colorado, I of course have no interest in any of those options. But if I could have paid 25 cents, or may 50, I might have done so to watch the video. Newsday.com ignores money from non-local online users who might be willing to pay a one-off fee.

In practice, I and most savvy online users probably would have clicked and searched a bit more to find a similar video about the new Droid phone elsewhere for free. But some percentage of people in my position would have paid rather than go through the hassle of searching elsewhere if there was a one-off payment option available. So Newsday.com leaves money on the table.

I believe that the kind of web pay-wall strategy that Newsday.com is deploying is certain to fail. It’s been done before by other newspaper websites in years past and it’s failed. But if the company is determined to lock down its news content, the least it could do is offer more options for viewing specific content.

Sometimes you just have to marvel at the inability of newspapers to grasp web publishing. Wow.

Tags: micropayments, newsday, paid content

15 Comment(s)

On Nov 10, 2009, John said:

Oh gee, sorry Steve, guess you’ll have to go find some other parasite news source that rips off the work of real journalists.
Off you go…
On Nov 10, 2009, Tom said:

Maybe you’re looking at this move from the wrong perspective: It’s not about generating revenue on the web, it’s about protecting its core revenue source, the newspaper.
On Nov 10, 2009, Steve said:

How is this anything other than “I want something, but I don’t want to pay much for it, and that frustrates me, so I’m angry at the person who wants to charge me for it.”?

You might have a point about Newsday leaving money on the table. But, given the decision to erect a pay wall, what choice do they have at this point? Has some workable mechanism for collecting micropayments from random Web surfers been invented that neither I nor Newsday has yet heard of?

This example could have been a good entree for a sane, thoughtful examination of the downsides and risks of Newsday’s experiment. Instead, it’s a petulant, juvenile rant that says nothing more than “Me want free content, me angry.” Oh, and with some tiresome, (mostly) no-longer-true stuff about how newspapers don’t get the Web.
On Nov 10, 2009, John from Minneapolis said:

My heart is with John, but my head is with Steve.

A continuing internal battle that seemingly has no resolution. Damn!
On Nov 10, 2009, Bill Burger said:

Steve: I agree 100 percen%, but believe the Newsday strategy actually is less about charging for web content than it is about Cablevision protecting its cable franchise on Long Island. They’ve decided to give away the paper to their customers (like a free toaster) as a tactic to keep them from defecting to Verizon FIOS or another competitor. (Newsday won’t accept FIOS ads either.) They’ve devalued Newsday more than any “free content” play ever could.
On Nov 10, 2009, Steve M. said:

So, maybe you should have subscribed. Newsday is pretty good paper.

By fits and starts, newspapers are fighting back. Information wants to be expensive and soon you will pay.
On Nov 10, 2009, inkstained said:

I think he makes a good point. There are pay models out there that will work. Setup a deal with paypal to collect micropayments, include a link to join paypal. Sure, it won’t work with everyone, but I bet Steve has a paypal account and Newsday would have made $.25.
On Nov 10, 2009, Greg Andrew said:

The reality is that Newsday isn’t leaving any money behind, because nobody who advertises on Newsday cares about reaching you out in Colorado.

Newsday’s move to a pay wall is is all about Cablevision’s competition with Verizon on Long Island for subscribers who spend $2000 a year on cable, internet, and phone.

And because 75% of Long Islanders are already Cablevision or Newsday subscribers, Newsday can put up the pay wall without losing the audience that subscribers want to reach. And there’s no way to make any money by selling things on the net from 25 or 50 cents; Newsday would pay more to process those charges than they would be paid by you.

It’s actually a very reasonable financial plan for them – but only them. But I don’t think there’s another newspaper in this country which could use this model, because Newsday’s circumstances are unique.
On Nov 10, 2009, John said:

Steve, you too clever by half doofus,
227,000 people paid 50 bucks a year for ny times columnists – and that was about five years ago when a lot fewer people were online, and it was only for columnists.
If that’s failure, I’ll take that kind of failure all day
On Nov 10, 2009, Steve Outing said:

I can always tell when something I’ve written has turned up on Romenesko; I get comments like some of those above. (… Sure enough, there’s the mention from Jim R.)

1. “Guess you’ll have to go find some other parasite news source that rips off the work of real journalists.” … 2. “Maybe you should have subscribed. Newsday is pretty good paper.” … 3. “How is this anything other than ‘I want something, but I don’t want to pay much for it, and that frustrates me, so I’m angry at the person who wants to charge me for it.’?” … 4. “Maybe you’re looking at this move from the wrong perspective: It’s not about generating revenue on the web, it’s about protecting its core revenue source, the newspaper.” … 5, “The reality is that Newsday isn’t leaving any money behind, because nobody who advertises on Newsday cares about reaching you out in Colorado.”

OK, #1: I said that given that Newsday.com has erected a paywall, it’s dumb to exclude out-of-market people who might be willing to pay for a single piece of content that someone else directs them to. Technology is available to accomplish that. Newsday’s is a strategy to focus exclusively on its local market. Hey, fine, if that’s what it wants to do, go for it. I’m saying it will fail because it’s a strategy about protecting the past rather than figuring out how to do well in the future by leveraging the Internet instead of fighting it.

#2: It’s unrealistic for a regional paper like Newsday to expect very many people in Colorado, or California, or Alaska or anywhere else, to pony up $5 a week. Sorry, it’s not the New York Times; and even if the Times decides to go this route (I doubt Bill Keller and his executive team are that dumb), they’re unlikely to get the online subscription numbers to match revenue from other strategies. TimesSelect demonstrated that, and pissed off the star columnists behind the TimesSelect wall because they lost a huge chunk of their audience, and thus their influence. A Newsday columnist already quit over this exact issue.

#3: Given the availability for publishers who choose Newsday.com’s route to charge in many different ways, my complaint is about offering up only one option that is likely to be acceptable only to people within its local market. If Newsday had put a one-off price of 50 cents on viewing the story, maybe I’d pay; if it asked $2.95, I’d have gone elsewhere. The market will decide what price point works (if any). I could easily find similar content to the article I cited elsewhere, so I’m not “angry”; I merely pointed out the lack of wisdom of limiting the options and leaving money behind.

#4: As Bill Burger aptly suggested, the strategy in fact devalues Newsday. It’s no longer part of the national conversation; its influence by way of this new strategy will sink to that of a community weekly (albeit a large community). Newsday.com is an added-value item for its cable subscribers and print-edition subscribers. The website itself is worth little beyond that, as it now is irrelevant outside its geographic area. It’s a business strategy to shore up a dying business (printing newspapers), which will fade over time anyway, and give a boost to its cable operation over its competitors. If Newsday’s owners are only in it for short-term gains and don’t care about long-term viability and long-term quality journalism for Long Island, then it’s a fine business strategy, I guess. Expect to see an exodus of journalistic talent from Newsday; what motivation do they have to work for a news brand that is so devalued and without influence beyond its local area? Keep the paychecks coming in during hard times? Oh, that’s a great recipe for inspired journalism.

#5: The point about leaving money behind is for payments for content by some outside the local area. With solutions available to add a one-off payment option, it’s silly to leave out that option. As for out-of-market advertising, then Newsday has cut off another revenue stream: national advertising fed to visitors from outside NY. That may not be big, but every revenue stream counts in the current environment.

One last point: I mentioned a piece of non-unique content that I couldn’t get to without subscribing (which, again, is not practical for me based on my location); many others covered the new Google Droid phone, so plenty of other (free) options. But what if the content I wanted was an investigative package produced by Newsday reporters that had significance outside NY? Would Newsday.com still demand a subscription for people in Colorado and elsewhere to see an important public-interest investigation that, from a public-service point of view, as many people as possible should know about? I’m disturbed by the public-service mission that newspapers typically have; perhaps Newsday’s owners don’t really care about that. But you’d think the least they could do on an investigative piece is offer a one-off price and not demand a subscription.
On Nov 10, 2009, Steve Outing said:

John: I recently heard an account about the TimesSelect decision from an executive there at the time with responsibility to make the call. TimesSelect subscription grew fairly quickly to the point you cite, then abruptly flattened. NYT execs could not foresee further significant growth and determined that they’d make more by unwalling the premium content.
On Nov 10, 2009, Steve Outing said:

Greg wrote: “Newsday would pay more to process those charges than they would be paid by you.” That’s outdated. Multiple companies have figured out how to avoid the exorbitant processing fees; several solutions are in alpha or beta now, geared toward serving publishers of low-price content. A couple:
http://bitcents.com/
http://aurumis.com/products/
Many more to come.
On Nov 10, 2009, Kurt Greenbaum said:

Not to mention that Newsday’s choice to tease something that’s not unique to New York or Long Island — a Droid review and video — would further dissuade me from paying. AP did a “Droid in action” video that was probably available free on umpteen other sites.
On Nov 18, 2009, Nicholas Gordon said:

When I got FIOS, I was amazed by the TV image quality and everything else was an upgrade to Cablevision. Now, Verizon is no philantropist. They charge nearly equal to what I paid for the triple service package with the movie channels I want. However, what I get in the standard package in HD blows Cablevision away. CV (thru MSG) broadcasts the NY Islander games in HD but doesnt make it available to FIOS users. Whatever, petty James Dolan stuff. About the same time the wall went up on newsday.com, he started to charge a $1.00 for the daily paper at the newstand. I used to enjoy the Friday, Sat, and Sunday Newsdays even with its new design they intro’d last year which is a disaster. But, out of principle, I moved over to the NY Post. Better gossip pages and celeb pics anyway.
On Dec 4, 2009, Media Fire said:

Wow, anonymous John really opened the discussions with a roar. Ripping of real journalists? You mean the 99.9% of online newspaper sites who offer their article for free or the 80% of journalists who edit an AP ticker as new work?

Oh, btw, Newsday.com’s somewhat popular website has dropped 1000 places in rank in the first month alone behind the pay wall. Awesome strategy.