May 28, 2013
A profitable model: How The Dallas Morning News plans to change the game
According to Moroney, the old ways of creating quality journalism no longer provide a profitable business model, and that simply hoping that ad and print revenue will “level out” is an imprudent plan. According to Moroney’s research, the newspaper industry loses $50 in print revenue for every $1 gained in digital advertisements.
“I’m going to give you a solution,” Moroney said in front of a 350 person audience during a presentation on disruption and innovation within the news marketplace.”We have to diversify our sources of revenue.”
Moroney unveiled The Dallas Morning News’ strategy to create supplemental streams of revenue by buying news startups. In March 2012, The Dallas Morning News’ parent corporation, A.H. Belo, began executing this strategy by creating 508 Digital Media, which sells social media, search engine optimization and targeted advertising services to small and medium sized businesses. 508 digital media now has 760 clients. Furthermore, A.H. Belo owns four other startups: Design Guide, Pegasus News, Speakeasy and Crowdsource, and plans to expand that number to 15. While each of these companies operates separately from The Dallas Morning News, the generated revenue is filtered back into the major news publisher.
“We are on a transformation,” Moroney said.
He also stated that these startups offset losses “dollar for dollar” that are incurred by running a news publishing company in a digitally driven marketplace. These startups, according to Moroney, have a significant competitive edge over similarly functioning companies because being a branch of The Dallas Morning News offers “instant credibility.” Moroney was met with some skepticism when he claimed that it is imperative for major news organizations to stay for-profit so that the entire news cycle can be covered, a task he said that is too great for non-profit publishers.
“You’re going to need the newsrooms of for-profit organizations,” Moroney said.