Star Touch is exactly why the feds need to leave the news business to its death throes. Screenshot by J-Source.

What the failure of Star Touch teaches us about a media bailout

Star Touch is exactly why the feds need to leave the news business to its death throes. Continue Reading What the failure of Star Touch teaches us about a media bailout

By Andrew Potter for In Due Course

The Toronto Star announced yesterday that it was shuttering its flagship Star Touch tablet app, laying off 30 employees and eating something north of $20 million in investment costs.

This comes a week after a group called “News Media Canada” — basically a legacy news media lobbying group — pitched the feds on a plan for the government to give the industry $350 million in support that would include funding 35 per cent of newsroom costs.

Clearly, the failure of Star Touch proves the need for the bailout money, yes?

Actually, no, it proves the exact opposite. Star Touch is exactly why the feds need to leave the news business to its death throes.

Some quick background: Star Touch was an attempt to recreate the walled garden of print in a digital format, to provide a closed environment where readers would come and stick around, paging through the heavily designed and curated app. It was explicitly sold as a multimedia version of a daily newspaper, “complete news experience with your favourite features, sections and columnists, not to mention a few extras you’ll find only in the app.”

Newspapers have been trying this trick for over a decade now, with one god failing after another. Star Touch was based on the app experience sold by La Presse, which has since shut down its print operation and gone digital-only. La Presse has been touting the success of its La Presse Plus app for a few years now, suggesting that they have succeeded where everyone else on earth has failed.

The Star bought the hype, and bought the technology. So props to them for trying, right?

Well, not really. Star Touch was always going to fail, for reasons that were obvious to anyone paying attention. First, if indeed La Presse has made the financials work on their app, it’s for two reasons: First, the Quebec market is unique in North America, perhaps in the world. Second, they went all-in, shutting down weekday print over a year ago, giving their readers no where else to go. That’s how you execute a strategy.

But the Star is not in a unique market, and they didn’t kill their print product. More to the point, they had a very good example of how the walled-garden app strategy would turn out in Postmedia’s Product 2.0/four platform strategy, that we launched at the Ottawa Citizen in 2014, and which launched in a few other locations around the country before sputtering out.

Of the four platforms (print, web, mobile, tablet), the tablet app was the most instructive: it was the nicest of the platforms, the most elegantly designed with the best user experience. It was the one that was closest to trying to copy the print walled garden. And it was very, very expensive and labour intensive to run. As an aesthetic reading experience, it was gorgeous. Our team at the Citizen hit it out of the park, execution-wise. As a commercial product, it was a failure, with shockingly low downloads and readership. The Star’s publisher’s memo about Star Touch (“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”) suggests they had similar results.

Ok so surely this shows the industry can’t seem to make anything work, they need a bailout, right?

Again, no. What this shows is that the Canadian news business needs to see a lot more destruction before it will start to get creative.

While the biggest circulation newspaper in Canada was busy pursuing a strategy that failed at the country’s biggest newspaper chain three years ago, the American industry has been innovating like crazy, on four dimensions: Some companies are going for sheer scale, pumping colossal volumes of traffic through an ad filter to squeeze out a business. There are some excellent VC-based startups — Vox, Vice, Fusion. There are niche and specialty publications such as Pro Publica, using a non-profit business model. And there have been billionaire vanity-investments in major national media (Washington Post).

Virtually none of this has happened in Canada, with the exception of some niche outlets (the Tyee) and spunky startups (iPolitics, Canadaland).

Why is that? Partly because Canada is a lot smaller than in the US, and the prospects for scale are limited, there aren’t that many publicly-minded billionaires, and VC money sees opportunities elsewhere.

But a lot of this is because the legacy media continue to dominate the landscape. Think for a second of how Star Touch might have played out if 35 per cent of its costs were funded by the government. Think of the optics of killing off those jobs after $8 million or more in public money had gone into it. Think of how the government, the union, and the public all would have played this announcement.

Star Touch would have gone from being a simple, straightforward, and necessary business decision into a highly politicized choice in which literally everyone would have had a say. This would be a recipe for stagnation, for risk aversion, for baking into place stale strategy and bad hirings. This is not how an industry innovates.

The meteor has slammed into the Yucatan, the sun has been blocked out, and the sauropods are on their last legs. The mammals will take over in due course. But the dinosaurs are asking for a sun-lamp and an oxygen mask to help get them through the nuclear winter.

This story was originally posted on In Due Course, and is reprinted here with the author’s permission.