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Paid Access Fails to Find Right Model

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A recent series of articles revealed that Newsday.com has signed up only 35 paying subscribers since putting itself behind a pay wall several months ago. The results are not a surprise.

Newsday.com has a rate of $5 a week for anyone who is not a subscriber of the Newsday print product or of the Long Island cable TV service, which is owned by Cablevision and which also owns Newsday.

The $5 a week rate is one of the highest ever attempted by a newspaper implementing paid access to its Web site. A more typical rate is $5 a month rather than $5 a week.

The great majority of online newspapers that have attempted paid access have failed at it and have reverted back to a free, advertising-supported model. A few reasons for these failures are consistent.

First, even at $5 or $6 a month, the signup rate reaches about 1 to 5 percent of the print circulation rate, and then it plateaus. Site visitors who previously read the articles for free discover that they can’t see them anymore and stop coming to the site. Site audience, ad inventory and ad revenue plunge as a result. The paper loses far more money in ad revenue than it gains in subscription revenue.

Cablevision claims it isn’t trying to gain signups or subscription revenue, but instead it is trying to retain print and cable subscribers. Any company that is simply trying to hold onto its shrinking base of customers for traditional media and not trying to grow new customers and new sources of revenue is heading for heartache.

At least two sources of information with moderate credibility indicate that the Newsday.com audience has declined severely in a short period of time, despite that fact that 75 percent of the market can still access the site for free. To put it another way, even when it’s free, people don’t want to bother with registration. They will go looking for their content elsewhere on sites that are easier to visit.

Those newspapers that experimented with just registration by itself a few years ago discovered that lesson in a big way.

Does a paid model work at all? A handful of newspapers in outlying markets with low competition claim to have some success. But the key is the lack of competition.

Any newspaper that is thinking about charging for access is running a major risk of losing customers, ad revenue and market share.

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