Toronto Star to shutter underperforming tablet app, lay off thirty

The Toronto Star is shutting down Star Touch, the ambitious tablet app it launched less than two years ago in the hope of forging a digital future against dwindling returns on print media advertising and circulation revenue at its parent company.

John Boynton, president of Torstar Corp. and the publisher of the Star, announced the move Monday in a memo to staff, adding that a new “universal” app for mobile and tablets will take its place on August 1. The Star will also lay off 29 full-time and one part-time staff as part of the move.

“The decision was made after an in-depth review of options for apps operating on mobile devices and tablets,” said Boynton, in his memo. “While Toronto Star Touch is an editorial success and has developed a loyal audience since its launch in 2015, the overall numbers of readers and advertising volumes are significantly lower than what the company had forecast and than what are required to make it a commercial success.”

Story continues below advertisement

READ MORE: Torstar laying off more than 50 people, job losses at Toronto Star, tablet app

Reached for comment, a spokesperson for Torstar said the company had nothing to add to Boynton’s memo.

Originally launched in the fall of 2015, and run on software developed by Montreal’s La Presse — which plans to go fully digital in 2018 by eliminating its weekend print edition — Star Touch never achieved ambitious readership targets set out by Torstar senior management. What began as a hope of attracting 200,000 weekly users ended in recent months with admissions from the company that the 60,000 or so that currently use the app were well below expectations.

On an investor’s conference call in May, Boynton — who took over the top job at Torstar from David Holland in March — conceded of the tablet app’s readership that “the volume doesn’t look like it’s progressing at all.”

“We tried something big and ambitious and expensive,” said Star editor in chief Michael Cooke, in a separate memo to newsroom staff. “But the audience is too small to be sustained as a business.”

Of the layoffs, 17 impact unionized staff with Unifor Local 87M. “While it’s a sad day, it wasn’t a complete surprise,” said Star journalist Jim Rankin, the staff union chair. “Management made it clear that the numbers weren’t where they needed to be. We’re losing hard working members who put out quite a product, who are quite talented and I hope we have a place for them in the future.”

Story continues below advertisement

The unionized staff will receive a better severance package after Unifor successfully negotiated bringing employees of Star Touch and the paper’s digital team into its collective agreement with the company as full-time employees in February.

Torstar, which lost $24.4 million in the first quarter of its 2017 fiscal year, has spent over $35 million on Star Touch since its launch. Alongside National Post-owner Postmedia and The Globe and Mail, the company is part of a consortium of newspaper publishers across Canada urging the federal government to create a $350 million fund to subsidize their businesses by expanding the Canada Periodical Fund and opening up its criteria to them.

Faced with digital advertising competition from foreign tech giants, Torstar and other private print media publishers in Canada have seen their main revenue streams decline by double digit percentages in recent years. The average number of paid copies of the Star purchased on weekdays fell to 151,800 in 2016 from 175,411 in 2015, according to the Canadian Circulations Audit Board.

Postmedia, the country’s largest newspaper company, eliminated 20 per cent of its salary costs, parting ways with hundreds of staff, in late 2016 and early 2017 in order to cut down on costs.

The companies face stiff competition in Canada’s growing $5.5 billion digital advertising market from Google and Facebook — Google’s share of the Canadian digital ad market alone was, at $2.3 billion, almost 10 times the size of the country’s entire daily newspaper industry in 2015.

Story continues below advertisement

“From our point of view, the demise of Star Touch is another indication that it is next to impossible for local news to compete if Google and Facebook are eating up 80 per cent of digital advertising revenue in Canada,” said Howard Law, the director of Unifor’s media segment. “Postmedia will go under and if the government were to stand by without attempting to give the industry any help that would be a disaster.”

Unifor was part of the working group alongside Torstar, Postmedia and others that resulted in the newspaper consortium, called News Media Canada and chaired by Winnipeg Free Press publisher Bob Cox, to call for the $350 million industry subsidy. A Public Policy Forum report commissioned the federal government earlier this year and another tabled by a panel of Liberal MPs on the Standing Committee for Heritage earlier this month made similar recommendations. All called for some form of levy or tax on broadband services to generate hundreds of millions of dollars to support ailing media companies.

However, Prime Minister Justin Trudeau was quick to dismiss the idea of a broadband tax when the Heritage Committee’s Liberal MPs tabled their reporting, stating “We’re not going to be raising taxes on the middle class through an Internet broadband tax. That is not an idea we are taking on.”

Heritage Minister Mélanie Joly is expected to announce a number of policies in the fall that could introduce major reforms to Canada’s media and broadcast industries, which many are hoping will help to alleviate struggling companies from declining revenue streams in traditional media business.

Story continues below advertisement

“The pressure is on,” said Law.