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Toronto Star’s ending mobile subscriptions signals decline of paid model

By
March 10, 2015

Star's mobile app.

Star’s mobile app.

The Toronto Star’s abandoning of digital subscriptions to focus on generating ad revenue from a free tablet edition highlights traditional publishers’ challenges in getting consumers to accept paid models after years of making content available at no charge.

Content from Canada’s largest newspaper will be available for free across mobile devices starting April 1 in conjunction with a decision announced last fall to introduce a free interactive tablet. The Star’s return to a free, ad-driven model to attract younger readers just 19 months after launching its paywall points to the mechanism’s limitations in driving mobile subscriptions.

“The decision on the paywall wasn’t because of a revenue problem, but rather we realized the utility of the paywall as a transition point from print to digital wasn’t working,” a Toronto Star spokesman said. “There wasn’t a pickup from the print subscribers that we anticipated.”

“The new tablet edition will be a key element of our multi-platform evolution,” he said. “It will allow us to establish deep engagement with a younger audience in this increasingly digital world.”

Tablet edition
The Star’s parent, Torstar, is using the technology of La Presse, a Montreal-based daily newspaper, to create the free tablet edition and generate digital ad revenue as part of a strategy that embraces the differences in platforms used to consume content.

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Readers resist moves to wean them away from free content.

“Many newspaper publishers have not crossed the chasm to digital and for those that have, it has been difficult to wean their readers off the Web-content-is-free model,” said Gary Schwartz, CEO of ImpactMobile, Toronto.

“Last year, Dallas Morning News dropped its paywall in favor of a free and premium-pay model,” he said. “But these hybrid models have had mixed success in the market.

“Very few properties can compete with a New York Times or Wall Street Journal loyal subscriber.”

The Star has the advantage of having a strong hyperlocal advertising footprint across Ontario. That revenue may tide them over as they invest in new and innovative market solutions, Mr. Schwartz said.

With so much free content available from a significant number of sources, it is easy for a consumer to look elsewhere rather than pay the Star a fee.

The challenge for a traditional publisher is to convert its increasingly mobile audience to consuming content digitally, since that is where the market has gone.

“Putting up a barrier, such as paywall, limits the number of people who will convert and the Star undoubtedly saw this in their numbers,” said Chuck Martin, CEO of  Mobile Future Institute, Boston.

“The simple truth is that advertisers want to reach more consumers and by adding a digital subscription fee, the number of consumers is naturally limited, thereby limiting the potential reach for advertising messages,” he said.

“There are other digital opportunities for publishers, such as mobile commerce, as well as high-value premium content, for which a percentage of mobile consumers will pay.”

Differentiating products
Numerous publications, including the Montreal Gazette, have undergone redesigns recently to differentiate products across mobile to let each one attract its own distinct audience while allowing advertisers to engage with specific customers.

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Paywall’s days may be limited in mobile newspapers.

“For most of the remaining newspapers the debate is no longer about paywall or free,” said Mr. Schwartz, chair emeritus of the Interactive Advertising Bureau’s mobile committee.

“The publishers’ content arsenal has fundamentally been eroded.

“We do not rely on Torstar for comics, classifieds or sports scores and stats and financial data,” he said. “Metroland Media Group [a large Torstar-owned media, publishing and distribution company] provides coupons and flyers but these again are dependent in great part on the paper’s distribution reach.”

Final Take
Michael Barris is staff reporter for Mobile Commerce Daily, New York

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