Experts: Newsday’s pay-for-play model will fail

by David Reich-Hale

Published: February 27, 2009

Eighteen months after the New York Times gave up on charging for online content, Newsday’s parent company is about to give the paid content model a shot.

And area media analysts said Cablevision’s timing couldn’t be worse.

“The economy is very, very bad,” said Kevin B. Kamen, the president of Baldwin-based Kamen & Co. Group Services. “People are not in the mood to pay extra for anything. They are out of work. They don’t have the money.”

Tom Rutledge, chief operating officer for Cablevision, told analysts on a conference call Thursday that the company planned to end the distribution of free content.

“Our goal was and is to use our electronic network assets and subscriber relationships to transform the way news is distributed,” Rutledge said.

Cablevision remains one of the few media outlets to lock down news coverage. Its Web site is only available to subscribers and Cablevision considers News 12 to be the key to stopping Verizon, which is aggressively trying to steal cable customers. Using that model, it’s conceivable that current Cablevision subscribers will be given free access to the Newsday site.

Cablevision has about 86 percent of the Nassau County cable market and 81 percent of the cable market in Suffolk County.

A lockdown should come as no surprise. At a Press Club of Long Island event earlier this month, Publisher Tim Knight said his publication was considering the pay model, adding that giving away content for free is a “death spiral.”

“I probably make more money on the Web than anyone else in this room, and I’m not afraid to roll the dice,” Knight said, when asked about free content. “I think about what’s the right kind of model for us. I know that there’s significant demand for the news that we create and produce based on my subscription retention, my subscription sales, and even to a lesser extent my single copy sales.”

But Jaci Clement, executive director of the Fair Media Council, said Newsday’s content is not worth paying for.

“They’re not performing enough original content to be valuable,” Clement said. “They have the police blotter, Associated Press copy and a lot of syndicated copy. That’s not enough to be considered a good buy.”

Clement also said many residents can’t afford another charge.

“Then you’ve set up a system of haves and have-nots,” Clement said.

But Knight said Newsday isn’t the only newspaper considering an online charge. He said

if publications fail to make money online, wealthy people with an agenda would control most papers.

Kamen, however, said the pay-to-play model would not help Cablevision make money.

“They’re not going to have more readers and that, in turn, will mean they won’t make as much in advertising,” Kamen said. “It’s a negative from a public relations perspective and from an advertising perspective.”

The New York Times was the last area newspaper to charge for content through a program called Times Select, which locked down columns and editorials, but not most news stories.

Cablevision has grappled with how to turn around Newsday since it bought the Melville daily for $650 million in mid-2008. The company on Thursday posted a fourth-quarter loss of $321 million, blaming the results on a $402 million write-down related to Newsday and a $41 million charge tied to shutting down its VOOM HD network.