August 13, 2013 Last Updated 2:46 pm

Toronto Star latest to go behind paywall as paper recently reported steep fall in ad revenue

The Toronto Star became the latest newspaper to go behind a paywall as newspapers across North America continue to fade from view in a self-imposed death spiral of paid content strategies that have, so far, failed to live up to the hype of its promoters in the digital first community. Unable to sustain its advertising, the Torstar Corp. newspaper will begin charging both its subscribers and non subscribers in a complete scheme designed to drive some incremental revenue.

“This marks a major transition for the Star that will help us provide, in print and online, the best and most comprehensive package of news and information in Canada,” wrote the paper’s publisher John Cruickshank on the paper’s website.

TorontoStar-front-lgStating today digital access will cost non subscribers $9.99 per month. Those that are currently print subscribers, but are not signed up for the automatic payments to be deducted from their credit cards will pay $4.99 per month. Those who have signed up for automatic payments for their print subscriptions will pay nothing to access the website without bumping up against the paywall.

The paper is also pushing a replica edition as an added bonus for digital subscribers.

Torstar recently reported its Q2 earnings which saw revenue drop 7.5 percent to $354.9 million from $383.9 million. Print advertising at the Star fell 14 percent (digital revenue was also down).

As has been typical at newspaper companies, rather than confront the advertising issue executives have chosen to change the subject by introducing paywalls. The strategy has generally managed to add circulation revenue, but has not compensated for the loss in print advertising.

Anyone with experience selling print advertising for a newspaper during the good years will remember that the value proposition was always demographics. Even in the ’80s newspapers could not claim total market penetration when competing against mass and marriage mailers. So to win the ad wars that emphasis was on demographics, with many papers also establishing their own total-market coverage programs using mail and inserts.

Today, though, newspaper companies have merged the editorial and business management position into one office. This may make the newsroom happy, but neither the advertising or circulation departments are feeling very comfortable – after all, despite betting the farm on paid circulation few newspaper publishers have ever served as a circulation director, either.

And so more paywalls can be expected as newspapers continue on their merry way.

In most businesses, the first thing an executive would want to know when trying to understand a decline in overall business is where it is coming from, and why. Then, what to do about it.

In the newspaper business, executives have looked at the loss of ad revenue and responded by locking down their websites. To get to this conclusion takes a long, winding, and confusing journey that only they seem to understand.

Somehow, in the discussion concerning ad losses neither newspaper ad executives, the advertising clients, nor their agencies are part of the discussion. Instead, the conversation involves a small group of media gurus, all from the editorial side, who are called upon to give us their wisdom.

It is as if to solve a problem of a house disappearing into a sinkhole the owner has decided to bring in house painters. It may result in the house looking better, but it still is disappearing into the hole.

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