As Toronto Star paywall tumbles, industry struggles with what comes next

Are newspaper paywalls headed for oblivion?

Barely a year after the last major Canadian daily gave up on unfettered online access to its content and put up a metered paywall to restrict access to paying subscribers, that same wall is about to come down. TorStar Corp. quietly announced this week, as part of its most recent quarterly earnings report, that it “anticipates eliminating the paywall on its www.thestar.com website next year.”

Paywalls limit web users’ access to a newspaper’s website. If you’re a subscriber, you can read everything. If you don’t pay, you can typically read up to 10 articles per month, after which point you’re stuck going somewhere else.

The Globe & Mail started the national trend with its paywall in 2012. Last year, the Sun Media chain announced it would gradually introduce paywalls at its papers across the country, while the Toronto Star was the last major national paper to dive in. The National Post first launched a paywall for its international visitors in 2012 before expanding it to everyone last year. The remaining papers in Postmedia’s chain converted to paywalls in 2013, as well.

The beginning of the end?

The Star’s about-face throws the viability of paywalls into question as the newspaper industry continues to search for workable revenue models. As digital advertising has eroded newspapers’ traditional sources of advertising income, publishers have struggled to replace the lost revenue by trying to monetize something, web content, that most consumers have spent close to two decades believing should be free.

“When you are a newspaper and you decide you want to have a paywall, you’re going up against years of Internet tradition,” Western University journalist lecturer Dan Brown told Yahoo Canada in an interview. “The whole ethic of the web is that information is free, and if you try to change that you’re trying to reverse people’s expectations, and that’s really tough. That’s why you see The Star throwing in the towel.”

While TorStar didn’t provide a reason for the move, its decision runs counter to recent data suggesting a shift toward greater paywall use. Newspaper Canada’s 2013 Daily Newspaper Circulation Report said 13 of the country’s 112 daily papers added paywalls last year, bringing the total number of online-subscriber-pay-based publications to 33.

Not remotely social

Paywalls don’t play well with social media-based consumption patterns. Instead of reading content directly on a website, readers increasingly connect via links in social media. During the shootings on Parliament Hill last month, for example, traffic spiked as readers flocked to Twitter and Facebook for the latest. Paywalls slow the process down and leave publishers vulnerable to reduced end-user trust and readership. As they look for a replacement model, Brown says it makes no sense to assume that one approach will work in all cases.

“Everyone points to the Wall Street Journal as a paywall that works,” he said. “But that is a publication that offers specialized content to a specialized audience. Just because a paywall works for the Wall Street Journal and the New York Times doesn’t mean it’ll work for the Toronto Star. I think enough organizations have tried enough different models that we can say there’s no one solution for everyone. Maybe every different media organization is going to have a different way of recouping its costs.”

As it prepares to jettison its paywall, TorStar Corp. is shifting its attention to a tablet edition based on the La Presse+ technology. The Montreal-based daily La Presse, which spent $40 million to develop the new platform before its April 2013 launch, now reaps the rewards of the country’s second-largest weekly digital-only circulation of 535,782. La Presse daily digital circulation is up to 88,212, which largely explains why the Star, whose digital readership is half that of La Presse, came calling.

Young and hopefully soon-to-be-reconnected

The Star plans to aim its free tablet edition at younger readers who have shied away from subscribing to traditional newspapers. Western’s Brown, whose teaching interests include online journalism, worries it could be another case of investing in a soon-to-be-obsolete model.

“The generals are always fighting the last war,” he said. “It’s great that they’re thinking about tablets, but in five years will we even have tablets? The technology that we’ll be using for the web by then probably hasn’t been invented yet. You should be asking yourself what comes after tablets.”

While IDC data shows the tablet market grew 11.5 per cent in the most recent quarter compared to the year-ago period, the growth rate is flattening amid increasing pressure from supersized smartphones. If tablets don’t represent the definitive future newspaper readership experience, it hardly makes sense to shift investment from one failed model to another.

As the Star prepares to be the first major daily to dismantle its paywall, expect others to follow as the Canadian newspaper industry continues to look for a way out of a deepening technology-driven quagmire. What comes after paywalls remains anyone’s guess, and there’s no guarantee that whatever comes next will stop the bleeding.