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Sept. 4, 2014, 2:54 p.m.
Business Models

Ken Doctor: Inside the Toronto Star’s $10 million niche print business

A Canadian daily’s strategy for wringing profit out of print is one of the newspaper business’s best kept secrets.

John Cruickshank, publisher of the Toronto Star, is the first to acknowledge that his strategy for the paper seems anachronistic.

Cruickshank talked the New York Times Syndicate into providing him a semi-custom weekly collection of global news and book reviews so he could sell a combined supplement — a 16-page New York Times International Weekly and 12-page New York Times Book Review, Canada Edition — to his Sunday readers. Now four years later, he is selling that supplement to 70,000 readers, who are paying C$1 a week (or 92 cents U.S.) for it. Further, the Star’s three paid niche newsprint products are producing more than C$10MM in new revenue every year, at a good margin.

It’s a fairly straightforward idea, one the Times Syndicate hadn’t tried before. The NYT Syndicate has sold the New York Times International Weekly around the world for many years. Thirty-five higher-quality publishers — with two more to be added soon — in 27 countries insert the weekly into their papers, winning readers and a halo of prestige. Publishers pay a fee to the Times, and don’t charge their readers anything extra for the package.

That the Toronto Star paid print supplements are quite profitably generating more than C$10 million a year is one of the best kept secrets in the newspaper industry. It’s also just one indicator of the new push for networked news products on the part of the Times, the Washington Post and USA Today, which I detail at the Lab today.

When the Times came to talk with Toronto Star management about its standard international supplement offer, the Star suggested the unorthodox idea of charging readers for it and splitting the new reader revenue with the Times. It took some convincing, but in October, 2010, the paid supplement launched.

What made the Star think the supplement would work? Cruickshank, a former publisher of the Chicago Sun-Times, had two good reasons.

First, there was the research. The publisher takes pride in doing more research than his peers, both with larger panels and smaller focus groups.

Five years ago, the company did research on the usage of its weekly TV book, a semi-obsolescent product for most papers. No surprise, many readers said they no longer used it. Some who did use it, though, really valued it and showed a willingness to pay for a better product.

When asked if they would pay for an enhanced TV book, 60 percent of subscribers said no. Only 10-12 percent said yes, and the rest were, predictably, undecided. Doing the math, the Star figured that it could make a profit if it could gain supplement buyers among 8-9 percent of its subscriber base.

As of August, the paper had signed up 39 percent — or 200,000 readers — for the supplement. One reason for the success: the Star provided a free, 12-week sampling period that allowed its base to grow accustomed to the product. As a result, though the “no’s” held, all the squishy undecideds ultimately said yes. The Star has increased the weekly price from 50 to 75 cents. (The Star has also sold weekly puzzle books for C$1.49 for the last three years.)

All of that experience “emboldened us,” says Cruickshank. That’s the vital ingredient of confidence that too many in the industry lack. These times are not for the timid, but they do reward informed risk-taking — especially when readers are being offered more and better.

With the Toronto Star model proven, fellow publishers are beginning to follow suit. The Dallas Morning News is in talks to include a similar paid Sunday supplement. Other publishers are contacting the Times as well — though what kind of business initiative the NYT Co. plans to make make of this now four-year-old innovation remains to be seen. Why it has taken so long is a hard question both the Times and local publishers should ask themselves.

Where might this innovation lead? Cruickshank says it’s not hard to imagine a half-dozen additional products built on testing and research in the next couple of years — but sometimes he has to pinch himself. “Who’d have thought there would be $10 million in newsprint,” he chuckles. “There’s a whole lot more opportunity than we dared to imagine….This is the cable model.” (The Star also sells its own advertising in the NYT supplement, five pages a week currently.)

While The New York Times continues its own bold experiments with what I’ve called Paywalls 2.0 with mobile-first NYT Now and others, it’s encouraging to see that high-quality content delivered how customers want it (remember, some 30 million still take subscriptions in the U.S.) can pay off, both for the Times and regional dailies.

Is Cruickshank sold on print supplements? Yes — but paid digital products are on his radar as well. “We’re looking into it,” he says.

Image of a 1960s Toronto Star delivery bicycle plate by Jerry “Woody” used under a Creative Commons license.

POSTED     Sept. 4, 2014, 2:54 p.m.
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