So the owners of Newsday have decided that beginning Wednesday, October 28, the majority of content on its website, Newsday.com, will only be available to subscribers of OptimumOnline (Cablevision‘s Internet Service Provider), Newsday, or those who are willing to pay $5 per week.

Although I have a mother and other relatives who live on Long Island, I’m not so desperate for online content about Long Island that I’ll be forking over $5 a week. How about you?

However, nonpaying customers will have access to some of newsday.com’s information, including the home page, school closings, weather, obituaries, classified and entertainment listings. There also will be some limited access to Newsday stories.

Newsday described the move as one that would create a “pioneering Web model,” combining the newspaper’s newsgathering services with Cablevision’s electronic distribution capabilities. About 75 percent of Long Island households are Newsday home delivery or Cablevision online customers or both, according to Newsday. Optimum Online customers total 2.5 million in the New York area, the paper said.

I’m not very business-minded so perhaps I’m missing something here. It seems that Newsday is essentially closing off most of their content to anyone who isn’t already funneling money into its parent company, Cablevision. A grandmother who lives in Des Moines, Iowa and simply *has* to know how her granddaughter’s lacrosse team in Patchogue is doing might be willing to pay for weekly access. Most people will see the prompt for payment as nothing more than a minor disturbance that can easily be rectified by clicking the X in the top right-hand corner of the screen or typing a new URL in the address bar.

We’ve seen this before, haven’t we? Remember the now-defunct TimesSelect?

If you don’t, let me refresh your memory. For 2 years, The New York Times wanted to take their revenue streams for a test drive and see if they could charge for some of their popular content such as op-ed columnists and any articles older than 30 days. Subscribers paid either $7.95 per month or $49.95 per year. Or one could pay to access a full, archived article. According to a 2007 Reuters article, TimesSelect generated $10 million in revenue each year. That’s certainly nothing to sneeze at. Especially when ad revenue is tanking. (And currently, circulation revenue is up above ad revenue for the Times.) So what happened that the Times was willing to forfeit $10 million in annual TimesSelect subscriber revenue?

During the TimesSelect years, site traffic plunged to new lows. Unique visitors plummeted. The people who needed access to TimesSelect (ie, students and media professionals) already had access to it. But the average consumer wasn’t willing to pay for it. Especially when aggregate sites such as Drudge Report and Yahoo! News would link to sites that offered similar content for free. The earlier-reference Reuters article summed it up beautifully:

The move is an acknowledgment by The Times that making Web site visitors pay for content would not bring in as much money as making it available for free and supporting it with advertising.

Since the disappearance of TimesSelect, the number of unique visitors and regular traffic has skyrocketed. But that hasn’t kept The New York Times Co. from losing millions upon millions of dollars every day. The ad revenue generated from increased traffic and readership unfortunately just hasn’t been enough to cover it.

But let’s take a step away from the Times‘s dilemma now and back to Newsday whose content is much more focused and much more local. Newsday‘s target is to people who are either on Long Island or are interested in Long Island happenings. Since at least 75 percent of people on Long Island will already likely have subscriber access to Newsday.com through OptimumOnline or their Newsday subscription, I suppose Newsday is hoping the other 25 percent will be willing to fork over the money to access their content or sign up for one of the two subscriptions. (I feel pretty safe saying OptimumOnline practically holds a monopoly for IS providers on the Island and only recently has Verizon FIOS begun slightly breaking into their market. But not by much. The triple-play deal [cable, phone, Internet] has given Islanders an incentive to stick with Cablevision.)

Media industry analysts will be eyeing Newsday.com’s subscriber model with a careful eye. Newsday.com hopes to be a model of the future but I’m afraid it’s simply a repeat of TimesSelect’s past. Newsday.com will make money during this period; that I don’t doubt. But they’ll find that their number of unique visitors will drop so low that the subscriber model will begin to render itself worthless and Newsday.com will be forced to make its content free (with ad-supported revenue, of course) for all once again.

Until media companies figure out a way to generate decent revenue from web advertising and consumers decide what’s valuable enough to pay for, I have a funny feeling we’ll all be stuck in this ad-supported free content limbo for a while.

(Image from Huffington Post)