'Paywall' model still needs work; Newsday reports only 35 subscribers

Major newspaper's struggle for online subscriptions fuels the online subscription business model debate, but are we asking the right questions?

There's been plenty of debate in recent times about the business model for print publications going forward, and many observers have speculated that an online subscription "paywall" may be the only way to stay in business.  The New York Times recently announced that it would be moving to some kind of subscription-based model by January 2011, and The Wall Street Journal has had one in place for several years.

However, it's just been revealed that Newsday, the leading New York metro-area newspaper based out of Long Island, has only secured 35 subscriptions for online access to its content after three months. That's about $9,000 in revenue. Newsday publisher Terry Jimenez reportedly stated that the paper's Website redesign and relaunch in anticipation of the new model in late October cost about $4 million. With 35 subscribers so far, the paper has grossed about $9,000.

The risk, of course, is that by putting up a paywall, pageviews drop off, and advertising will follow.  Newsday is also pursuing other options. Subscribers to Optimum Cable, for example, has free access to Newsday.com. Optimum is partially owned by the Dolan family, who also own Newsday. That covers about 75% of Long Island.

The lesson here is that as the Internet disrupts business models for content provision, there will be new business models emerging -- and we're still finding out what works and what won't work. The New York Times is talking about some kind of limit in which readers will be able to view a certain amount of articles per month before hitting a paywall. The Wall Street Journal allows for some free access, but requires a $2-per-week subscription for full views of its articles.

These are just the leading newspapers, of course, there are countless other content providers that also will be struggling with this disruption.

What's really interesting about the movement of newspapers online -- and doesn't really get talked about -- is that they are converging with the TV broadcast networks. Think about it -- newspapers now provide video content for viewing, while TV networks now provide reading material. What's the difference between CNN and USA Today online? At this point, there is no difference online. Notable too is the fact that the networks (we'll call them the entities formerly known as broadcast networks) have always been 100%-advertising based models, and have survived their fair share of paradigm shifts. The Internet has erased the distinction between print and broadcast content. Newsday tips its hat in this direction with its cable franchise.

UPDATE -- another "mulling" point: One of the selling features pitched with Apple's iPad (announced January 27) is the ability to read newspapers online.  (Also a feature with Amazon Kindle.) The New York Times is the first thing Steve Jobs turned to in his presentation.

This post was originally published on Smartplanet.com


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