Cablevision Puts Up Newsday's Paywall; But Really Just Using It As A Churn Reducer

from the that's-not-a-business-model dept

When Cablevision first bought Newsday, Charles Dolan admitted the company knew very little about the newspaper business, but promised to consult widely with newspaper experts in coming up with a plan. That seemed like a really really bad idea, since all the newspaper experts we've seen don't seem to even recognize what business they're really in. But, it looks like that's exactly what Dolan did. Back in February, the company announced that it was going to put up a paywall for its content. Since there had been no update or any action since then, I'd actually begun to wonder if the company was rethinking that idea. No such luck. Apparently it just took a bit of time to fully plan out Newsday's self-destruction.

The company has announced that it will start charging a whopping $5/week (not month, but week) to access the website unless you're an existing paper newspaper subscriber and/or a Cablevision subscriber.

Let's be absolutely clear what this is. It is not a plan to build a 21st century news organization. It's a plan to try to reduce churn elsewhere, by putting up a slight hurdle for Cablevision cable customers and Newsday newspaper customers to prevent them from leaving. Cablevision's customer base and Newsday's subscriber base overlaps quite a bit, so for plenty of those folks there will be no change at all. But this won't do anything to actually help the news organization grow. Those who don't subscribe to the paper edition or who use a competitor for broadband (like Verizon Fios which is pushing hard in Cablevision's market) will simply go elsewhere. While the NYC papers don't cover Long Island news quite as completely, they do a pretty good job with the basics, and other local news sources will fill in the rest. Cablevision is basically saying that it's giving up in the online news business. It's an admission that it doesn't know how to compete. This won't help it sign up new customers, and may only barely help it prevent old customers from leaving.

It's basically a suicide play for Newsday. This is really a disappointment, since Cablevision -- amazingly -- had actually been one of the most forward thinking cable companies out there in terms of offering real value on the broadband side of things. But apparently it bought Newsday as an asset to let it wither away.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Anonymous Coward, Oct 23rd, 2009 @ 4:08am

    It would cut me off if I was a Cablevision subscriber. I've never seen a news article so well written that it was worth bothering to create an account at the NY Times. Not worth the hassle of logging in.

     

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  2.  
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    DS, Oct 23rd, 2009 @ 5:28am

    Humm, I don't really see it that way. It's more of a added bundled service. I think that this is actually the way to go. Maybe with as huge of a paywall as this case, but still...

     

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  3.  
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    old-wiz, Oct 23rd, 2009 @ 5:46am

    Sheesh

    $5 per week? Funny. Let's place bets on how long it lasts. If you follow the link to the story and read the comments, I couldn't find a single one that said they would pay $5 per week. Maybe Newsday has a death wish?

     

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  4.  
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    Anonymous Coward, Oct 23rd, 2009 @ 6:11am

    Actually, this could be a very good play for them.

    If your target audience is in a certain area, and all cable internet subscribers get in for free, what you have done is narrow and focus your audience, eliminating freeloaders from outside the area, and generally lowered your costs to maintain your website.

    it gives cabelvision a small item to use to seperate their internet brand from others as well.

    Before dismissing the idea, I would say you have to let it run to see what happens.

     

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  5.  
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    Steve, Oct 23rd, 2009 @ 7:07am

    Read the comments on the Newsday article itself, they are great. So far, I've only seen one supporting the idea, and doing it on moral ground.

     

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  6.  
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    John Fenderson (profile), Oct 23rd, 2009 @ 8:31am

    Re:

    "generally lowered your costs to maintain your website."

    By an insignificant amount. Presumably, it will cost the same to produce the website contents, so the only cost reduced is one of bandwidth, and bandwidth is very cheap in comparison to the other business expenses. So they'll be reducing the least painful bill they have.

    But they will be reducing their audience, and so reducing the potential for revenue. Even among their subscriber base, there are bound to be people like me who aren't willing to register with a site just to see its content, regardless of whether or not it's free.

     

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    Hephaestus (profile), Oct 23rd, 2009 @ 9:41am

    This seems some how familiar ....

    Years back IBM bought Lotus not understanding what they were all about. The Cablevision purchase of Newsday seems to be the same basic lack of synergy as the Lotus deal.

     

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  8.  
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    faceless (profile), Oct 23rd, 2009 @ 11:02am

    i predict this will backfire, and this is coming from a Cablevision customer who loves their internet service and will NEVER use FIOS unless it's the *only* option available due to Verizon having gotten on my bad side twice already.

     

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    Otm Shank (profile), Oct 23rd, 2009 @ 8:59pm

    Also News 12

    Cablevision's News 12 operation -- a mosaic of local news organizations in New Jersey, New York, and Connecticut -- have a closed website. In order to access News 12 online, I have to enter my cable bill information or pay a fee.

    It's mantra is that it is exclusive to cable TV (and only on Cablevision in areas it has a presence) and not available on satellite or phone-company TV. In the process, they have locked content down on their website, in an attempt to make the cable service more valuable.

     

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  10.  
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    Newsday Friend, Jan 1st, 2010 @ 9:53am

    Cablevision's plan for Newsday

    Cablevision's plan for Newsday seems to be that of its other most recent suitors: cut, cut, cut except for executive compensation. As was widely reported last week, Cablevision executives who also run Newsday will get fat bonuses in the New Year even as they ask union wage-earners, middle-class folks on Long Island, to accept a 10 percent to 15 percent pay cut. That's right: The contract that the Newsday unions must vote on in less than two weeks asks for a cruel giveback of wages that will seriously harm these workers' ability to provide for their families. Thanks, Cablevision.

     

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