Canada became everyone’s digital-media guinea pig in 2011.
The Huffington Post launched its first international edition here, spring-boarding its global expansion. And Netflix used its growth in Canada as a model for taking its service across Latin America and into the United Kingdom. But perhaps most striking of all, when the most famous name in American journalism decided to make a groundbreaking change to its business model, the much-heralded New York Times paywall was born right here in Canada.
For the Times, it was a 10-day head start, a chance last March to iron out the kinks of asking readers to pay for news on its website and mobile devices. For Canadian newspaper readers, it was a glimpse into the future.
The coming year will see news organizations asking more readers to pay for digital content – not just online, but also on smartphones and tablet devices. It will be especially noticeable for Canadian readers, and crucial for news media outlets here seeking a new revenue source.
The country’s largest chain of papers, Postmedia Network Canada Corp., has been testing a “metered” model like the Times, which limits the amount of free access readers have to the website before prompting them to pay. Postmedia has tested the plan at the Montreal Gazette, and plans to expand metered sites to more of its papers early in the new year. Torstar Corp. put up its first paywall in September, at The Hamilton Spectator, and is considering when and how to charge for access at its other publications. The Globe and Mail is developing its own paid digital product for business news, set to launch some time next summer.
And it’s not just large media companies making the move: this month, readers in New Brunswick saw their local dailies owned by the Irving family’s Brunswick News Inc., including Saint John’s Telegraph-Journal, launch an aggressive model that demands payment even to see headlines on the website.
“This is going to be the year when it becomes the exception if a publisher doesn’t yet have a paid model online, which is a dramatic shift in the industry,” said Gordon Crovitz, who ran the digital side of the business at Dow Jones & Co. Inc. in the late ’90s, and helped take The Wall Street Journal behind a paywall. Mr. Crovitz, who later became publisher of the Journal before it was sold to News Corp., is one of the founders of Press+, which built a system for newspapers to process payments and identify subscribers online and on mobile devices. The company, now owned by RR Donnelley, takes a cut of revenues – typically 20 per cent – but unlike Apple Inc., it allows publishers to access subscriber data, which is key for advertisers.
Mr. Crovitz says Press+ started the year with 20 clients for its service. It now has roughly 220 – Postmedia and Torstar among them – and for 2012 has already surpassed that, with 300 planned launches in the works.
Traditionally, advertising was what held a newspaper’s business together, accounting for 70 to 80 per cent, or more, of its revenues. But then the bottom dropped out.
According to figures from the National Newspaper Association, revenues from print advertising in U.S. newspapers in 2010 fell to their lowest level since 1983 – and those ad sales have continued to drop every quarter in 2011 as well. The industry collected $22.8-billion (U.S.) in total print advertising revenues in 2010, less than half of the sales they recorded five years earlier. Complete figures for 2011 are not yet available, but year-to-date ad sales have dropped more than 10 per cent compared with the same period last year. While things have not been quite as dire in Canada as in the U.S., the declines have forced newspapers everywhere to search for a new source of revenue – the readers who access their content digitally.
