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Why Paywalls Will Block Revenues, Not News


Newsday learned the hard way: People don't want to pony up.

In October, the Long Island, New York, daily newspaper Newsday, (which was bought by Cablevision (CVC) in 2008 for $650 million and has a circulation of 398,231 on weekdays, and 464,169 on Sundays), put its website,, behind a pay wall.

The charge? $5 a week.

Last week, Newsday publisher Terry Jimenez told the newsroom just how successful the initiative has been. In its first three months, a whopping 35 people have signed up for access.

That's fewer than 12 people a month. Less than three per week. Equal to .009% of Newsday's physical circulation.

According to the New York Observer, Michael Amon, a social services reporter at the paper, asked Jimenez to repeat the number, assuming he must have misheard the statement.

"I heard you say 35 people," Amon said. "Is that number correct?"

Jimenez nodded yes.

The Observer points out that Newsday's site redesign and relaunch cost $4 million. Its 35 online subscribers have grossed a total of $9,000 in annual revenue.

Sequestering news behind a paywall hasn't been a disaster for everyone. Pearson's (PSO) said its paper, Financial Times, "ended the year ahead of our expectations" in a preliminary statement ahead of its 2009 earnings report due on March 1.

"Our subscription-based revenues remained resilient and the tough market conditions for advertising revenues began to show some signs of easing in the fourth quarter," the company said.

Editor Lionel Barber noted, "We reckon [this] year will be the first year that revenues from content overtake revenues from print advertising. The way things are evolving, content revenues should overtake all advertising revenues by 2012."

But Alan Rusbridger, News & Media editor-in-chief of the Guardian, is vehemently against the idea of paywalls. "By having a paywall, you are cutting your journalism off from the world," he said in an interview.

The question on everyone's mind now is whether a paywall will work for the New York Times (NYT), which is desperately struggling to find ways to stay afloat.

Beginning in 2011, the Times will introduce a "metered" model for A press release issued by the company says it will offer users "free access to a set number of articles per month and then charge users once they exceed that number."

The Times goes on to say that this will "enable to create a second revenue stream and preserve its robust advertising business. It will also provide the necessary flexibility to keep an appropriate ratio between free and paid content and stay connected to a search-driven Web."

Subscribers to the print edition will be given free access to the site.

"Our audiences are very loyal and we believe that our readers will pay for our award-winning digital content and services," says Arthur Sulzberger, Jr., chairman of The New York Times Company and publisher of the New York Times.

That is, if those "loyal audiences" don't catch wind of websites like, which allows people to borrow other people's login info to access password-protected content.
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