National Post (National Edition)
Torstar to return to digital subscription model
Newspaper to launch improved paywall
TORONTO • Torstar Corp. plans to charge readers for online news once more in its latest strategy to recover after the internet disrupted the newspaper industry.
Chief executive John Boynton announced Wednesday the media company, owner of the Toronto Star and dozens of other publications, will move to a digital subscription model, emulating recurring revenue models in industries such as music and entertainment. “In some cases, it turned around entire industries,” Boynton said at the firm’s annual general meeting in Toronto, citing Spotify and Netflix.
Boynton did not reveal details on the subscription model, including when it will launch or how much it will cost, but said it will apply to the Toronto Star and Starmetro brands. The Globe and Mail and the National Post already use online subscription models.
This marks the Star’s second foray into charging for access to online content. In August 2013, it launched a paywall that asked readers to subscribe for $9.99 per month. It dumped the paywall less than two years later because it couldn’t get enough people to sign up. It subsequently launched subscriptions for Star Touch, a tablet app, but axed that product after sinking $23 million into the experiment.
But Boynton, who was hired last spring to help the company transition to digital, is convinced it will work this time thanks to better technology, shifting attitudes and leadership changes.
The old paywall didn’t have the correct infrastructure to succeed in the recurring revenue business, which relies heavily on data, he said. The new product will analyze what readers are reading, when and where in order to better curate content and target ads, he said. Torstar will never sell reader data, he told reporters after the meeting.
Consumers have become more comfortable with subscription models thanks to their prevalence across industries, Boynton said. Torstar’s research found that consumers, especially younger audiences aged 18 to 34, are also increasingly willing to pay for news given issues around trust and fake news. Eight per cent of Canadians pay for digital news, he said, a number that’s expected to grow given penetration rates of 16 per cent in the U.S. and 20 per cent in Scandinavia.
Boynton acknowledged there’s a “certain irony” in returning to a subscription model given the vast majority of metropolitan newspapers used to rely on revenue from home delivery subscriptions before someone decided to give it away online for free.
“Now you look at it and go, ‘What were we thinking,’” hesaid.
Torstar’s move comes the same week Bloomberg announced a paywall for its online news and Montreal’s La Presse, taking a different tactic, said it would become a non-profit. Torstar said it which will spend $11 million to $13 million this year to reinvent its core business.
The biggest change thus far occurred in April when Torstar rebranded the Metro News free daily newspapers to Starmetro in outposts across the country and migrated Metro content to thestar.com. Boynton called it a “very low-cost way of expanding and getting a lot of scale digitally.”
Torstar’s strategy will not rely on government funding or agreements with platforms like Google and Facebook, Boynton said.
He later clarified that the government could help support the industry through its disruption, much like it did the auto industry, but that Torstar’s strategy doesn’t rely on any support.
The announcement came after Torstar reported a loss of $14.5 million in the three months ending Mar. 31, down from a loss of $24.3 million in the same period last year. The results were in line with analysts’ expectations given ongoing declines in print advertising and subscription revenue as consumers and advertisers spend more time and money online.