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Paying for online content

Alan D. Mutter, a former newspaper editor and cable television executive, is a nationally recognized consultant and commentator on new media issues. His blog is called "Reflections of a Newsosaur."

A few days before Halloween, Newsday became the biggest newspaper in the United States to start charging for most of its content on the Web after giving it away free for more than a decade.

This bold initiative - taking place under rather unique circumstances - is being watched by newspaper publishers across the nation who are eager to slow the decline in revenues during the worst advertising drought in modern history, but are alarmed by recent studies suggesting consumers might balk at paying for news.

Forrester market research found, for example, that 80 percent of respondents in a poll would spurn pay sites in favor of the many others that provide information for free.

Of the largest newspapers, only The Wall Street Journal has been successful in charging for online news, but it is seen as an exception because its readers mostly use it for business, rather than personal, purposes.

Newsday's experiment undoubtedly will produce some of the market insight publishers crave as they agonize over whether, and how, to charge for the valuable content they decided to give away in the early days of the Internet. But Newsday's initiative, while bold, isn't nearly as brave as it might appear to be. Publishers watching this experiment need to consider the unique factors at play at Newsday.

Subscribers to the print edition or customers of Optimum Online service provided by Cablevision, owner of both companies, get access to for free. Visitors who do neither are charged $5 a week for access.

The fee is far stiffer than the average $3 per month that consumers said they were willing to pay to read news in a national poll conducted by the Boston Consulting Group. Only 48 percent said they would pay.

Why would Newsday go against such odds? It enjoys the rare good fortune of serving 75 percent of the homes in its market on Long Island, where residents subscribe to the newspaper, its sister cable service or both. This fortuitous circumstance is unavailable to most other newspapers, which generally aren't owned by cable systems in markets they serve.

Other publishers should take this into account if they are inclined to emulate Newsday's experiment. On the other hand, should it succeed, this idea may provide a good reason for enterprising publishers to take the local cable owner to lunch.

Because print and cable subscribers won't have to do much more than register one time to continue getting online news for free, the hometown audience seems reasonably secure.

Newsday risks losing out-of-town visitors who can't subscribe to Cablevision, but its focus on attracting local advertisers means these are not visitors Newsday is seeking. For papers where out-of-market advertising is important, this typically represents about a third of a Web site's audience.

Research data for the first month since the changeover show that Newsday's unique visitors declined 21 percent and page views 34 percent. But if the initiative is accepted by a large enough number of customers, the innovative cross-media sharing of content will suggest a potential solution for other markets to offset a nearly 40 percent decline in advertising since 2006.

Comprehensive, professionally generated reports from local papers would give cable operators a selling advantage over competitors. This could become more significant as advanced systems seamlessly flow online news, sports, movies and on-demand Web content to home entertainment centers.

On Long Island, the continued presence of a healthy and vigorous newspaper will be a welcome, if not to say essential, community asset. But the power and stature the paper enjoys in the market will require it, as never before, to exercise exceptional rigor, fairness and impartiality in all it undertakes.


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