Newsday is first to take the plunge, goes all-pay online next week; one major provider vows to remain free

NEW YORK — Look, up in the sky! It’s a balloon!

No, it’s not Falcom Heene floating over Colorado (or not, as it turned out). It’s Terry Jimenez, floating over Long Island!

Who???

Dear readers, meet Terry Jimenez, hero to newspaper publishers and scourge of free content on the Internet. What, you’ve never heard of him? Those of you without the Terry Jimenez poster can write to the Newspaper Association of America. Think of the iconic Farrah Fawcett poster, but with presses rolling. Really.

No, just kidding (I think).

Terry Jimenez is Publisher of the Long Island daily Newsday, and he is launching the biggest trial balloon of the month, in his announcement that Newsday will be the first major metro daily to retreat behind a pay-only Internet wall.

Long discussed by newspaper owners envious of the huge success of The Wall Street Journal pay-only Internet site — with a huge asterisk: you can actually find most of the Journal content by going through a back door. Rupert Murdoch’s News Corp has long been publishers’ poster child for what they think a newspaper web site should be: another source of subscriber revenue. And since the Journal ink-on-paper edition just passed USA TODAY to become the largest circulation newspaper in the U.S., the web site may have boosted the dead tree edition’s sales, because wsj.com is available for free to anyone who has the paper paper delivered.

And that is exactly the model Newsday has in mind: Subscribe to the paper paper and you get all of the content on the web. For a mere $5 a week, you can get everything at www.newsday.com – but if you don’t pay, you just get all of the ads and a few teasers.

Terry Jimenez’ move next week will be closely watched, and imitators are already getting in line. Other publishers say they want to move their web sites to the wsj-newsday model, too, but one said he wanted to wait a decent interval (say, a day or two) so there would be no question of collusion. That’s illegal — with a huge asterisk for daily newspapers who would compete with each other, but Congress helpfully allowed erstwhile newspaper competitors to merge business operations and otherwise engage in collusive and uncompetitive business practices.

And yet, dear reader, from coverage of the report by Len Downie and Michael Shudson urging federal subsidies to newspapers, you thought that newspapers weren’t already heavily, um, financially supported by the government which they cover without fear or favor. Exemption of newspapers from federal anti-monopoly laws is just one subsidy that my colleagues Geoffrey Cowan and David Westphal are studying, but you should read their reports for details. And we don’t need to detail the many subsidies of broadcasters or their government-monopoly-granted cable cousins. And they all still lose money! Is C-SPAN the only news medium in the U.S. not dependent on government largesse?

But I digress.

Jimenez’ bold move at Newsday will be cited favorably and copied by publishers (and their employees) from coast to coast tired of cutbacks. Besides, no one seems to know an alternative. One former Gannett editor over lunch last week noted that the Gannett-owned Detroit newspaper has evolved into a web site with an occasional ink-on-paper edition attached, printed three days a week. But that’s unfair: Detroit is the basket case of major markets, in a state so bankrupt that sustained federal “stimulus” spending has generated only 397 new jobs. Yes, that’s fewer than four hundred for the entire state of Michigan for all of the $787 billion of federal “stimulus” spending. No, I’m not making that up: Those job numbers are official government stats. As always, truth trumps satire, even though Jon Stewart is so often closer to what’s really happening than corporately co-owned anchor Katie Couric. Does that mean The Daily Show should get a (new) federal subsidy?

But once again I digress.

Back to Jimenez and his silver (gold?) trial balloon. Oh joy! Oh rapture! Oh Seraphim! Let the subscriptions flood the Internet newsrooms! Glory be to the bottom line! Oh frabjuous jubjub!

But… What’s this: Is that dark cloud in the sky? Are lightning bolts truly about to strike the paid-newspaper balloon? And careful readers will have noticed the second part of this article’s headline, after the semicolon.

Let’s back up: Newspaper publishers are honorable men and women, but they are, well, newspaper publishers. And as we all are frail humanity, they are prone to assumptions based on their experiences. If you are accustomed to being a monopoly provider of news, then you are prone to act as if, well, you are a monopoly provider of news. Which is why incumbent media rarely understand competition from innovators, from radio to television to the Internet to… You get the idea.

But newspapers long ago ceased to be monopoly providers of news. The barrier to entry, as it were, fell long ago, documented in the pre-web era by Anthony Smith, Ev Dennis and many others, Goodbye Gutenberg, indeed. They just don’t know it yet. Maybe they know it intellectually, but viscerally, they are still the dinosaurs wondering about these pesky rodents. And by the way, was that a meteor that just struck?

So the moment of newsday.com going all-pay seemed an appropriate time to visit with Richard Sambrook, head of BBC News, one of the world’s most respected sources of international news. (Disclosure: Sambrook was extraordinarily helpful to this writer in my public television days, including helping me add much live BBC television news from London including three live newscasts a day to the schedule of Howard University Television in 2002.)

And here is the problem and the promise of the Newsday balloon:

Sambrook assured me that BBC News is and will always remain free. In the UK, the BBC is supported by the license fee paid by all owners of television receivers (or at least they are supposed to pay). Globally, BBC News is supported by advertising. So if a major story is breaking anywhere in the world, you don’t need to go to newsday.com (or wsj,com or nytimes.com). Auntie Beeb, a.k.a. news.bbc.co.uk, will always be there, worldwide. Free of charge. Zip. Nada.

This is really bad news for nytimes.com. The New York Times has staked its future on its national and international coverage,losing money in the process but the banker to and second largest stockholder of The New York Times, Mexican billionaire Carlos Slim may lose patience and just take over the company. And do you want to be the new Mexico City bureau chief?

But once again I digress.

By now you see that what Newsday is really selling is Long Island news. Nassau and Suffolk Counties. That’s it. And that is what newspapers, from a million circulation to a few thousand, are selling: local news. Newsday has a huge advantage, as noted by Jimenez in his announcement:

“75 percent of Long Island households are already Newsday home delivery” customers, Jimenez said. Wow! Who has that penetration!!!

Oh, by the way, Nassau and Suffolk are two of the richest counties in the United States. To paraphrase the PBS slogan, if Newsday can’t do it, who can? But this will be the question, from Newsday to local dailies in medium- and small-size markets everywhere: Can you convert your web site readers to paid subscribers before they (and you) discover there are also competitors for local news?

Stay tuned, dear readers. As Bette Davis once said, “Fasten your seat belt. It’s going to be a bumpy ride.”

Come to think about it, she was an incumbent referring to a disruptive innovator!