Canada's largest newspaper is building a paywall around its online content, after deciding digital ads aren't enough to fund its future.
Toronto Star publisher John Cruickshank said Monday the newspaper will ask readers to pay for access to its website in the new year, joining rivals such as The Globe and Mail and Postmedia with a metered subscription model that will limit the number of articles readers can view for free each month.
Newspaper companies have been savaged by a weak print advertising market in recent years as more spending moves online. Many held out hope that digital ad sales could make up for lost print sales over time, but it has become increasingly clear that's unlikely to happen, said Mr. Cruickshank. For every $7 lost in print, industry watchers estimate, newspapers are only gaining $1 online.
"We've seen the rates for digital display ads falling as inventory proliferates and we've been required to find alternative sources of revenue," he said. "And I think we've now seen from the New York Times that there is a possible and respectable business case to be made if you have the right content."
The Star – whose executives expressed skepticism about paywalls only six months ago – joins other Canadian publishers in looking to monetize online content and fund more of its journalism with contributions from subscribers rather than advertisers.
The Globe and Mail introduced its paywall last week, allowing unlimited access for subscribers but limiting non-subscribers to 10 free articles per month. The National Post – and other daily newspapers owned by Postmedia Network Canada Corp., such as the Calgary Herald and Edmonton Journal – will all be put behind paywalls by early next year.
Postmedia has been experimenting with paywalls in Montreal and Ottawa, but chief executive officer Paul Godfrey said publishers can't afford to keep giving away content on multiple platforms when it is losing $28-million a quarter.
"You see television and radio and even bloggers depending on what they find in the newspapers every day," Mr. Godfrey said. "If they don't want to buy the newspaper, we can still sell something."
On the same day that Postmedia announced its loss and intentions last week, New York Times Co. said its digital subscribership grew to 566,000 – nearly enough to offset the amount of advertising lost in the quarter.
The success of the Times' model has emboldened publishers around the world to speed up their plans, particularly because digital subscribers tend to keep their newspaper subscriptions as well. But even the Times noted that the advertising market – which still pulls in the bulk of revenue for publishers – isn't likely to improve soon.
"The advertising landscape has been categorized by a challenging economic environment," chief financial officer James Follo said during a call with analysts.
Torstar Corp., which publishes the Star, reported a $35-million profit in its last quarter but warned print advertising revenues at the Star were down across the chain by 11 per cent from a year ago. The company also owns a chain of weekly newspapers and book publisher Harlequin.