Toronto Star next in line for Internet content paywall

More Canadian newspapers are stepping behind a paywall as the Toronto Star, the country's biggest paper by circulation, announcing Monday that it will ask users to start paying for online content next year.

The Star said in a note to readers that it plans to launch a digital subscription model that will fall in step with its competitors, which include The Globe and Mail and the National Post.

The announcement comes as Canadian publishers look for new ways to drive revenues as more readers gravitate towards the online version of their daily papers, using their computers, tablets and smartphones. The shift is eroding print advertising revenues in favour of less lucrative online ad sales.

"This move will provide a new source of revenue for the Star that will help support our ability to provide readers of both our print and online editions with the best and most comprehensive package of news and information in Canada," said publisher John Cruickshank in a note to readers.

Newspapers have been trying to make the case that paying for content will help provide for better reporting. The Star promises to invest in more quality journalism, which includes adding four new beat reporters to cover special areas like the environment and global economics.

But as more papers opt for a digital subscription platform, questions linger about whether readers are prepared to buy into the media industry's new model, especially since its practically unproven in Canada.

"It has been many years -- over a decade -- that people have gotten used to getting their news for free, so that behaviour won't change quickly," said Kaan Yigit, a media analyst at Solutions Research Group.

Some readers voiced their distaste for paywalls on message boards for both the Star and the Globe websites. Some said they would sooner turn to other free resources rather than fork out a monthly subscription fee.

For Canadian media companies, that's a real threat.

Unlike several years ago, readers have plenty of alternative options on the Internet, which could mean that when they're locked out of one website, some will opt to look elsewhere.

"It's that paradox -- on one hand you want to be relied upon, but on the other hand if your article is behind a paywall, I might not read it," Yigit said.

Yigit said his research suggests that fewer than one-in-six Canadians will pay for newspaper content on the Internet.

"Unfortunately the reality is there are way too many substitutes that are free," he added.

One of the greatest enemies to the digital subscription model could be the media itself. In Canada, numerous television and radio broadcasters provide websites that run written versions of their daily coverage. Then there are countless other blogs and websites that focus on both national and international news, like CBC.ca and Huffington Post.

Sun Media, which is owned by Quebecor (TSX:QBR.B), has so far not embarked on the pay model. It publishes an assortment of newspapers including the Toronto Sun, as well as Canoe.ca and a network of English- and French-language Internet properties. The company did not return calls for comment about whether it plans for a paywall on any of its websites.

Toronto Star is owned by Torstar Corp. (TSX:TS.B), which is a part owner of Canadian Press Enterprises Inc. The Globe and Square Victoria Communications Group, the parent of La Presse publisher Gesca Ltee own the rest of the company.

Torstar, which reports its third-quarter earnings results on Wednesday, also publishes the Hamilton Spectator and other daily and community papers throughout Ontario.

National Post owner Postmedia (TSX:PNC.A) (TSX:PNC.B), which also owns numerous city dailies, became the first major Canadian media organization to roll out its own paywall structure earlier this year, in an effort to help tighten its quarterly losses.

The Globe set up its paywall last week, and offers readers an initial 99 cent trial subscription before the full price kicks in.

"People are furious initially but they often come around," said Suzanne Klan, associate chair of the School of Journalism at Ryerson University in Toronto.

"I think people who are dependent on news will start to miss it. If you want news, it is not a free service."

On Monday, both the Wall Street Journal and New York Times chose to temporarily pull down their paywalls so that readers would have unlimited access to free coverage of hurricane Sandy.

Torstar's B shares ended up a penny to $8.71 on Monday at the Toronto Stock Exchange.