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Newsday Monetization Issue Illustrates Wider Problem for Mobile and Internet Ecosystems

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January 27, 2010

Newsday Monetization Issue Illustrates Wider Problem for Mobile and Internet Ecosystems

By Gary Kim, Contributing Editor

In late October 2009, Newsday, the Long Island daily newspaper, put its content site behind a pay wall. The paper was one of the first non-business newspapers to put up a pay wall.
After three months, about 35 people have agreed to pay $5 a week to read it online. That isn't a typo. '35' is the harvest of readers after three months.
Analysts at Ovum (News - Alert) think that might not be unusual, as lots of traditional media players try to convert their 'free' readers to “paid” in 2010.

Separately, analysts at Gartner (News - Alert) estimate global downloads from mobile application stores will surpass 21.6 billion by 2013. But 'no incremental charge' downloads will account for 82 per cent of all activity in 2010, and will account for 87 percent of downloads in 2013.
The point here is that monetizing online and mobile content will be a complicated matter for just about everybody in the ecosystem.
Perhaps oddly, providers of devices and access will have the most-direct monetization models, as much as Internet service providers worry about being reduced to 'dumb pipe' status, even as much of the perceived end user engagement and 'value' seems to reside in the applications.
Perhaps the issue we have not perceived so clearly is that the analogy to 'commodity dumb pipe' is 'commodity -like or free content and applications.' Though ISPs worry about 'commodity' access they provide, the same problem will have to be faced by most application and content providers as well.
Oddly enough, and as much as ISPs fret, most of the money made in the mobile and Internet ecosystem will be gotten by device manufacturers and ISPs, not application software or content.
'More corpses than successes' sums up what Ovum expects to see. In other words, 2010 'will be another year of creative destruction for media as traditional sectors such as print and broadcast attempt to relocate, retain and monetize their audiences online,' Ovum says.
Though media conglomerates are unlikely to have much success with pay walls, Ovum analysts think suppliers of services and technology such as e-book readers and other enablers of new consumption methods might profit.
Of course, Cablevision might have another monetization route in mind; one it already uses. Subscribers to the print version of Newsday can read online at no incremental cost.
Likewise, any Optimum (News - Alert) Cable subscribers also get no-extra-charge online access. Some 75 percent of residents on Long Island have either a newspaper subscription or Optimum Cable service, the company maintains.
So the online Newsday product is a value-add for customers who buy other Cablevision products. That's the good news. The bad news is that many other print publishers have no other assets to provide the actual revenue model.
All of that simply points out the challenges of the mobile and Internet ecosystem: though operating and capital cost are important for every business, costs are doubly important for application and content providers who might have to rely on indirect monetization mechanisms for much of their success.
ISPs likely will find they must create indirect monetization mechanisms as well. As access to the AT&T (News - Alert), Verizon and Cablevision public hot spot networks are a 'value add' for fixed broadband access or mobile broadband customers,
Still, traffic at the Newsday site has fallen. In December 2009, the site had 1.5 million unique visits, a drop from 2.2 million in October 2009, according to Nielsen Media Online.

Stefania Viscusi is an assignment editor for TMCnet, covering voice and Voice over IP technologies. She also oversees production of TMCnet's e-Newsletters in the areas of Internet telephony and speech technology. To read more of Stefania's articles, please visit her columnist page.

Edited by Stefania Viscusi

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