Dallas Morning News Models a New Path
Originally published by Outsell on Nov 16, 2009
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Important Details: The Dallas Morning News felt the same heat from circulation decline as its metro peers in the last round of circulation reporting a month ago. Yet the numbers came in about where the paper expected them, says publisher Jim Moroney. Further, Moroney says his circulation forecast has held, despite subscriber and single copy price increases in the neighborhood of 40% in the midst of recession.
Like many dailies, the Morning News hadn’t done a lot of pricing changes over the last decade. With substantial ad decline, however, Moroney decided he wanted to know more about the elasticity of the paper pricing. Just how valuable is the Morning News — long the dominant daily in the Dallas-Fort Worth metro area to its readers? Moroney took an unorthodox approach to answer that question, hiring The Modellers, a Salt Lake City-based company experienced in working with Fortune 500 packaged goods companies. The company ran research to determine how many readers would be lost at differing price points — and with differing product configurations.
After all, Moroney believed there had to be some relationship between the perception (and reality) of the product and its price. He’s critical of the news industry trend to both cut the product and raise prices.
“If you cut my Dr. Pepper from 12 ounces to 8 ounces and charge me more, I’ll notice,” he says. “People aren’t stupid.”
So The Modellers tested pricing, with three product scenarios. One offered a steady state product, one a diminished product and one an enhanced product. Unsurprisingly, the consumers said they’d be more highly to pay the substantially higher cost if the product was improved — especially along “town and city” and “investigative journalism” lines.
The Morning News took the plunge, increasing home delivery prices to $30 from $18 and going from 50 cents to a dollar on the newsstand.
It also added back about 11 pages a week, says Editor Bob Mong, to the A, Metro, Lifestyle, Sports and Business sections. Mong says he has been given the green light for five new hires, a phenomenon unusual in the industry today. The investigative team of nine may get bolstered as well.
The result, says Moroney, has been close to the model, which predicted a 13% decrease in paid copies due to the pricing. The publisher’s analysis of his own numbers is that that’s the track they’re on.
Moroney cautions that the test is ongoing, with more modest, additional pricing changes planned into the next year. He praises the “scientific approach” as one worth employing in a traditional seat-of-the-pants industry. Further, he says, elasticity of price will vary much market-to-market. For instance, A.H. Belo — which owns the Morning News — has moved ahead with similar pricing with its Providence paper, but shied away from it with its Riverside one. “The good news is that newspapers have a lot of pricing headroom,” says Moroney.
Losing “paid” readers is only part of the new equation. In August, the Morning News launched four-day-a-week “Briefing“, targeting non-subscribing households and filling in gaps for advertisers.
Implications: Outsell believes the Morning News model is a key one for the industry. As publishers have released data on circulation decline, they’ve cited various reasons for the decline. Yet, few have cited their own product cutbacks — size of product, amount of reporting, fewer ads. We think Moroney is stating the obvious. Consumers — and especially newspaper readers — aren’t easily fooled, but they can be swayed to stick around with both a greater product offering and more communication from the paper and its editor, as Bob Mong is doing. Readers want their papers to succeed, again, but need to believe they’re part of a strong proposition, not one that is wasting away.
The Morning News newsroom no longer houses the 600 staffers it had in 2004; it is down 46% to about 320+. The old days won’t be coming back, but this powerhouse of a paper can set an example for others about how a metro paper can build from its 2009 base forward. Adding a few people or pages here and there may not seem like a lot, but it’s a sign of reversing momentum — adopting a page from the playbook of many tiny upstart competitors — and momentum is hugely important in the psyches of readers and advertisers.