Newsday to make you pay for it

I’m an occasional source for Newsday writer John Jeansonne, so I take an occasional, ego-driven interest in what goes on at that paper. What goes on now? Probably the end of my reading of Newsday:

Cablevision Systems Corp plans to charge online readers of its Newsday newspaper, a move that would make it one of the first large U.S. papers to reverse a trend toward free Web readership.

The paper said in a statement late on Thursday that it is in the process of transforming the site into a locally focused cable service.

Newsday, which covers the New York suburb of Long Island, was bought by Cablevision in a $650 million deal last May that was widely criticized on Wall Street as a puzzling move into a troubled newspaper market.

Cablevision had to write down Newsday’s value by $402 million on Thursday, pushing its fourth-quarter results to a loss, as U.S. print advertising sales and circulation have dropped with more readers seeking free news on the Web.

I hate to be so cavalier about saying “smell ya later Newsday, but I ain’t readin’ ya anymore!” but that’s just how it is. I am sympathetic to the plight of newspapers and I truly do want to see them succeed and continue in some form, but as things currently sit, there’s no way I can bring myself to pay for any one paper’s content. If this blog is evidence of anything, it’s evidence that it takes the consumption of dozens if not scores of news sources to get anything approaching a comprehensive view of a subject in which you have a real interest, and my budget simply isn’t set up to subscribe to dozens or scores of pay-for-content sites.

I’m not sure what the solution is, but the piecemeal conversion to pay-for-content certainly ain’t it.

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Comments

  1. Adam said...

    Didn’t the New York Times try this route a few years ago with a subscription Times Plus (or something like that) service?  Didn’t work then and definitely won’t work now.

  2. pete said...

    I wonder how the Wall Street Journal’s online business is doing. They seem to be the only major paper still doing the pay thing (last I checked), and the really strange thing is that I’d actually consider paying for their content.

    I’m trying to wrap my head around whether or not their coverage just happens to line up with my interests, or if there’s something unique about their content that makes the pay model viable.

  3. pete said...

    I’d agree, though, that for the vast majority of outlets, the pay model is just not viable at all. There are just too many sources of generic reporting these days—it takes something really special (Neyer, Law, Silver, etc) to get me thinking about paying.

  4. Matt Sullivan said...

    I am willing to bet that this just about kills Newsday. The paper services Long Island as its local market, meaning that is broaders closely on the territory covered by the NYTimes, Post and Daily News. I can’t see a large reader base paying for an online subscription and they are already suffering from declining subscriptions and print sales. It is yet another example of Cablevision being poorly run, small minded, and reactionary. As if the Knick and Rangers weren’t proof enough!

  5. Pete Toms said...

    Regrettably, newspapers are done.  I’m not an anti corporate media type a la Chomsky, they are important and will be missed.  (and not because of sports coverage).  I’m a dinasour, I subscribe to 3 dead tree papers.  But, it’s done and there is nothing they can do.

    As for paying for web content, is it the principle or the pocketbook that dissuades folks from paying?  I’m an online subscriber to at least several sites…

  6. APBA Guy said...

    I think Craig’s point was that online content has to be unique to warrant a fee. Some could argue that WSJ is not unique, but their focus is to a moneyed class for whom a small subscription is probably a tax deduction anyway.

    Baseball coverage is hardly unique, even with a high quality reporter in a major market. There is simply too much input from too many sources to make subscription coverage viable on a large scale.

  7. pete said...

    Reporting what is happening just has very little value these days, outside of investigative reporting. There are just too many sources for generic news to charge people money for it.

    I’m willing to pay for commentary and analysis, but it has to be unique and authoritative (which, I guess, would be the distinction between BPro and ‘ordinary’ blog type sites, although, admittedly, that has a lot to do with marketing).

  8. Jason @ IIATMS said...

    Due to some big conflicts of mine, I won’t make too many comments about this. 

    @ Matt Sullivan: Calling Cablevision “poorly run, small minded, and reactionary” is itself, small minded and lazy.  Sure, the MSG (Knicks/Rangers) business unit garners all the headlines, but in reality, that business unit accounts for just 25% of what Cablevision is, revenue-wise.  Newsday accounted for 5% of 4Q08 revenues.

    Cablevision, the cable company, accounted for 64% of the entire corporation’s revenue in 4Q08.  It also kicked off ~40% Operating Margin.  That operating margin accounted for more than 100% of the total company’s operating margin (other areas operated with an operating loss).  That is not a poorly run machine; it’s a veritable cash machine.  And, since banging on MSG is easy, despite all the hullabaloo, it still generated a positive Operating Income.

    The cable arm has the BEST operating statistics of any MSO in the US and is widely regarded as the best run cable outfit. 

    The Newsday purchase, we can all agree, was not a good one financially, but ownership had a different vision.  Will it work?  Who knows.

    Sorry for the ramble/rant, but I just wanted to set some of the facts straight.

  9. Richard in Dallas said...

    Online news is replacing/has replaced the traditional dead tree version of information disbursement.  My understanding of how the finances of newspapers used to work is that the advertising paid for the gathering and publishing of the information and the price to the consumer paid for the ditribution of it.  Since the distribution now consists of pushing a button rather than loading heavy bundles on to trucks, driving them all over creation, unloading them to local carriers who then delivered them to individuals or putting them on store shelves, there seems to be either A) a poor job of advertising sales and/or pricing or B) an unrealistic greed on the part of the publishers.  Either way, I don’t see it as something that I should have to pay…….

  10. Chris H. said...

    First, Jason (as always) makes some good points: as MSOs go, Cablevision seems to be very well run.  CableCos always held out the promise of being cash machines but, for the most part, never delivered, becoming debt machines instead.  Go take a look at Time Warner or (hahahahaha) Charter sometime if you want to see poorly-run.  Hahahahahaha, Charter.

    In terms of a working revenue model, I’m not sure what to tell the newspapers.  Like others, I’ll pay for analysis or something unique (I subbed to ESPN Insider ‘cause of Neyer/klaw, bp of course, and so on).  And although I no longer subscribe to a print newspaper, I do still get The Economist in print form because I prefer to read it that way.

  11. Pete Toms said...

    As much as the James Dolan gets bashed (not undeservedly) for being inept at running his teams, isn’t MSG still the #1 grossing concert venue in the US?

    Back to the papers, hasn’t Cuban mused about pro sports teams partnering with papers?  More seriously, news gathering will be missed.  Bloggers can provide commentary, satire, context but they aren’t going to be on the ground in, lets say, the Sudan, to collect and verify facts…

  12. Pete Toms said...

    Jason @ Chris H.  The future (demise?) of cable is an important subject for the pro sports biz.  Shawn Hoffman writes frequently about this.  He sees the future of broadcasting as IPTV.  Is cable (over the air – as it currently exists – is soon to die) the next dinasour?

  13. Wooden U. Lykteneau said...

    Actually, Richard from Dallas is close to the correct explanation, except for his Manichaen conclusion.

    Where newspapers slipped was letting the likes of Craigslist and Monster get a foot into the door of the province which they had dominated: classified advertising at the local level. Had they kept that stranglehold, they could afford to be both free and online only (charging, of course, for access to those classifieds).

    The cost of distribution, BTW, pales in comparison to the cost of the educated labor and newsprint. When the MBAs took over the newsrooms in the 1980s and 1990s, they saw that they could cut costs by cutting staff and few people (except for the woefully underpaid to begin with reporters) complained, and people, who were increasingly turning to other media didn’t care about the (sharp) corresponding drop in quality of the content.

    Hence, why folks like Richard feel no reason to pay for it. And I can’t say I blame them. If I were to walk into my local newspaper, the number of J-school degrees in the room would increase by two… from zero to two.

  14. Chris H. said...

    Pete Toms: well it depends what you mean.

    From a technology perspective, sure, IPTV is the future.  It’s already in use, with AT&T;being the biggest provider in this country with their U-Verse thingy.

    But that’s a technology statement.  Whether a provider like Cablevision or AT&T;or whatever uses traditional (or all-digital) cable, switched-digital video, or IPTV only really matters to the engineers.  It doesn’t change the current model of going to a single TV provider to get all of your channels for some kind of monthly fee.

    Of course, ideally we’d be able to grab only the channels we want in an a-la-carte fashion, possibly even from multiple providers.  The roadblocks to this are not technical.  No provider wants to offer a-la-carte because (A) it’s an administrative nightmare (though with modern IPTV, etc. systems it should be much less of one) and, more importantly, (B) because the providers can’t get the channels themselves in a similar fashion.  “Want to carry the Chicago CBS affiliate for a non-exhorbitant fee?” asks Viacom.  “Then you’d better pony up for the twelve new Nickelodeon channels we just launched.” 

    Bundling and packaging like this happens all the time, and complex agreements are struck involving the placement of various channels into various tiers of programming. 

    Now, if you mean IPTV as in actual Internet-based TV, that may be longer in coming.  The studios and content providers will fight this tooth and nail, as they do every time there’s a change in technology.  As an example, take a look at hulu.  Hulu is a nifty service: free streaming TV shows, ad-supported. 

    So along comes a media-pc application named boxee; boxee adds in hulu-compatibility, so now you can watch hulu conveniently on your TV with a media PC.  Hulu (a joint venture of NBC and Fox) immediately leans on boxee to remove this functionality (which boxee does).  Watch the free streaming TV shows on a PC?  Fine.  On your TV?  Not so fine.

    Of course, I expect there are also complicated legal/union/ad-rate issues involved—definitions of what constitutes broadcast programming versus Internet programming, and so on.

  15. Pete Toms said...

    Chris, thanks, interesting.

    When I was referencing IPTV I think I meant “actual Internet-based TV”.  Shawn Hoffman @ BP and on his blog has been promoting the idea that MLBAM is well positioned because IPTV is the future and cable will die.  I honestly don’t know, but I’m interested.

    A few more questions.

    When I read about carriage disputes (ok, NFL Network) I often read that cable and pro sports worry that the FCC will step in and impose a la carte.  I understand why they don’t want it and your explanation of the complications was enlightening.  So, prediction, will the FCC impose a la carte?

    Can you explain this to me?  Particularly the last sentence, I kinda understand it.  It was part of some 09 predictions from the SBJ sports media writer John Ourand.

    “Retransmission battles will replace cable operators’ carriage fights with sports networks.
    The past few years were dominated by cable’s carriage battles with sports networks like NFL Network and Big Ten Network. But this year, cable operators will be focused more on retransmission consent fights with local broadcast channels, with most local channels looking to charge about a quarter a subscriber per month. Local stations are negotiating for the bulk of the retransmission deals and don’t want to share that added revenue with the networks. That will cause at least one network to explore whether it should dump the network affiliate model in favor of seeking a dual revenue model straight from the cable operators.”

  16. Mangini's Baby said...

    What will really hurt pay newsday.com is if the Times, NY Daily News, and NY Post all remain available free on line.  NY sports fans will have plenty of free options.  In Denver, where they’re down to just one print daily, maybe the pay strategy works.

  17. Chris H. said...

    Pete Toms:

    Sorry for the delay in answering.  If you want to take this coversation offline, you can email me at see aich eee eee are at aich eee eee are eff ay emm eye el why dot enn eee tee.

    I don’t think the FCC will impose a la carte, though I was more confident of that when the Republicans were in power.  A lot of powerful lobbies would be opposed, and it’s not clear that it would actually benefit consumers (my suspicion is that it would end up costing us more).  But you never know; if some commissioner gets a bee in his or her bonnet about having to “pay for” stations s/he doesn’t want…

    As for the next bit…the traditional model for distribution/delivery of content is:

    * Network purchases programming for national broadcast
    * Network affiliates purchase that programming from the parent network and agree to broadcast it along w/national ads at agreed-to times
    * Affiliates sell the remaining ad time for themselves

    This all made sense when over-the-air broadcast was the only way to get TV.

    When cable first started rolling out many years ago, the MSOs often didn’t pay the local affiliates (and by extension the parent networks) anything.  The affiliates considered the cable providers as a way to reach more viewers and it was just seen as a wash.  No longer.  The local affiliates know that they’re still more important than anything else—by and large the network primetime shows still pull in the largest audiences—and they want their share.  This is complicated further by the “O&Os;”—local affiliates that are actually owned by the parent networks.  Example: when Dish Network had to re-negotiate their agreement with CBS/Viacom for the Chicago affiliate, Viacom pressured them to pick up a couple of new cable networks.  Dish resisted, and Viacom threatened to pull WBBM (our CBS channel).  Brinksmanship ensued.

    With so many different delivery systems available, the affiliate model makes less sense.  If Viacom can work directly with Dish, Comcast, etc. to distribute Nickelodeon, then why not CBS?  Other than local news and sports, does it matter to most people?  Probably not—and I’d argue with younger folks, not at all.  How many teenagers have even seen a local news broadcast?  Not many, I’d bet.  Just as my children will probably never have a “home” phone line when they are on their own, they will probably never watch the local news either.

    Of course, there are still folks that watch TV over-the-air, but the number is shrinking, and will probably shrink more after analog shutdown in June. 

    The other complication is regulatory.  Right now there are regulations (usually referred to as SYNDEX) that, for example, prevent a cable provider from allowing me to subscribe to Chicago local stations if I live in, say, Phoenix.  These rules were designed in the early days of cable to prevent large-market powerhouses from putting small-market affiliates out of business.  It’s why you have to prove that you’re not covered by a local market to get the network feeds from DirecTV or Dish.

    Having said that, I think the endgame may be some kind of thing like MLBAM provides, where people can get the content they want directly from providers, but until the regulatory landscape catches up with technology, it’ll be a difficult goal to achieve.

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