Commentary

Free While It Lasts: Cablevision Removes Newsday.com Paywall

Cablevision is offering free access to Newsday's Web site through Jan. 7, dropping its pay wall, which was erected in October 2009. Cablevision, in part, was looking to establish a dual-revenue stream by adding subscription revenues to ad dollars.

The site has been spiffed up and the plan is to show it off and attract more paying customers. The company has been charging $20 a month - or $5 a week -- for access. When the site appeared suddenly free, it seemed as if Cablevision had reversed course.

Partly because after the toll booth was installed last fall, Newsday.com's traffic plummeted. In September 2009 -- the last full month before the wall went up -- the site drew 1.6 million unique visitors, according to comScore. This September, that was down to 704,000.

Even if the Newsday.com subscription model was not doing as well as Cablevision hoped, the gambit could serve as a loss leader -- offering a carrot to other company customers. The site was free to subscribers of its Optimum Online broadband service - a core company operation -- and Newsday home-delivery customers.

The pay wall protected content from the print publication posted on the Web, and Web-only offerings such as video and blogs.

Newsday provides ample coverage of its home Long Island market. But for those off the island, maybe the best part of the pay wall going away, albeit temporarily, is a hello again to Neil Best.  His "Watchdog" blog about the sports media industry is a must-read among industry executives, who likely paid the $240 a year for it. His constant postings break news and have a wry sense of humor.

Also free again -- for now -- is the "TV Zone" blog by influential TV columnist Verne Gay. He also breaks news and provides droll commentary. Publicists throughout the industry intently monitor his opinions, be it in print or online.

Cablevision is an extremely profitable and well-run cable operator, but was new to the newspaper business when it picked up Newsday for $650 million in 2008. Its cable systems have been on the cutting-edge in areas ranging from DVR service to plans for streaming live TV on iPads next year. Cablevision can be stubborn and doesn't give up easily;  it is going to stick with the Newsday.com pay model.  

But newspapers face a quandary: Readers are rushing online, revenues aren't following

In the last year, with its core operations, Cablevision held firm in negotiations and allowed the Food Network, ABC and Fox to go off its system in fee disputes, even as it risked losing TV subscribers.  

From the start, Cablevision's purchase of Newsday from the Tribune Co. seemed more of a vanity play than sound business decision. When the deal was done, the future of newspapers was already in doubt.But the company is controlled by the wealthy Dolan family, longtime Long Island residents, who may have been keen to own the local paper.

There were some suggestions Newsday could synergistically bolster coverage on Cablevision's local news network on Long Island. But Cablevision could have hired away the news staff for even 5% of the $650 million. The paper can also serve as a marketing vehicle for Cablevision's core products. But again, another 5% of the purchase price could have bought ads for maybe years to come.

Newsday's latest financials: in the latest quarter, it had an operating loss of $1.7 million, more than double the loss a year ago. Ad revenue was down nearly 8%. Revenues were down 4% to $76.5 million.

 If the Newsday.com experiment raises more questions about paid content online, research shows a different prospect for streaming video. A new study shows many young adults -- the ones advertisers want to reach -- are willing to pay for streams of TV shows.

The research shows 51% in the 18-to-34 demo are "interested" in paying either a monthly fee or per-episode toll. Citing the research from an arm of Ipsos, MediaPost quoted executive Brian Cruikshank stating: "The young adult population clearly has an appetite for accessing their regularly watch shows and are willing to pay for that access." Further, the fee-based market is competitive with no dominant service."

For newspapers the story is different.

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