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A warning to publishers contemplating paywalls: Newsday.com has gotten exactly 35 new subscribers since putting its content behind a paywall in October. As The New York Observer points out, that's the number of students in an average size elementary school class.
That doesn't sound like an acquisition rate that's going to save newspapers. And while Newsday's management strategy may not be typical, that number should send shivers through the heart's of local general interest publications.
The Long Island daily was one of the first non-financial publications to put its content behind a paywall in 2009. NewsCorp.'s Rupert Murdoch has been threatening to have his other publications follow in the footsteps of The Wall Street Journal, but so far no anouncements have been made.
And months before The New York Times announced it would start charging for content in 2011, Newsday put its circulation numbers to the test.
It's expected that publications will lost some readership when content stops being free. But the results at Newsweek are less comical than depressing. It's been three months since the Long Island general interest publication went behind a paywall. And in that time, only 35 people have opted to pay $260 a year to get complete access to Newsday.com.
According to The Observer:
"That astoundingly low figure was revealed in a newsroom-wide meeting last week by publisher Terry Jimenez when a reporter asked how many people had signed up for the site. Mr. Jimenez didn't know the number off the top of his head, so he asked a deputy sitting near him. He replied 35.
Michael Amon, a social services reporter, asked for clarification.
'I heard you say 35 people,' he said, from Newsday's auditorium in Melville. "Is that number correct?'
Mr. Jimenez nodded."
With a recent website redesign estimated at $4 million, Newsday is going to need a lot more than that $9,000 subscription revenue to stay above water.
Of course, Newsday hasn't choked off its entire readership. Subscribers to the paper product and anyone who has Optimum Cable (owned by the same company), has free access to the website. And the paper claims that 75% of Long Island either has a subscription or Optimum Cable.
According to MediaPost:
"The newspaper has not released figures on how many people are paying for access to content, but a top company executive has said he does not expect the new pay model to 'materially' impact revenues in the 'near term.' One reason: many people interested in the site also receive the paper at home or get Cablevision high-speed Internet service, the executive said."
Meanwhile, Jimenez tells The Observer that "the web was not intended to be a revenue generator, but rather to provide extra benefit to loyal subscribers."
But as subscribers start pulling the plug on their print subscriptions, that could get very problematic. Since December of last year, unique visitors at Newsday.com declined 47% and page views have fallen 32%.
In December, Newsday.com had 1.4 million unique visitors and 18.9 million page views, according to Nielsen. That's down from 2.7 million and 27.8 million, respectively, for December in 2008.
The newspaper has been in turmoil since it was purchased by the Dolan family in May of 2008. Some erratic management, combined with a tanking economy, has led to top editors walking out and severe revenue declines. The normally profitable paper lost $7 million in the first three quarters of last year.
And in the month after implementing the paywall, Newsday's unique visitors fell 43%, and page views were down 35%.
Those rates should terrify the management at general interest newspapers. It will be another year before The New York Times is going to test its theories on charging for content. But for struggling local papers, it looks like the economy's negative effect on the media industry hasn't guilted consumers into paying for this kind of content.
While Newsday can't really be used as a prognosticator for every other general interest paper, it says a lot about consumer sentiment that only 35 people were willing to pay for access to the paper's website since October. Even if 75% of Long Islanders read Newsday, the fact that the paper wasn't able to turn more freeriders into subscribers means that readers don't think they're getting good content from the site. Or — more depressingly — that they're not willing to pay for it even if they like the content.
Newsday sent me the following statement:
"Millions of Cablevision customers in the New York tri-state area and 75% of Long Island households, including all Newsday home delivery subscribers, now have exclusive access to newsday.com at no additional charge. Internal research shows that Newsday's Web site is an extremely popular new benefit to hundreds of thousands of Long Island Cablevision households. Given the number of households in our market that have access to Newsday's Web site as a result of other subscriptions, it is no surprise that a relatively modest number have chosen the pay option. "