The Dallas Morning News Paywall to Take Effect Tuesday

The previously announced paywall at The Dallas Morning News will take effect Tuesday, and Pegasus News founder Mike Orren posted the email to the newspaper’s staff from publisher Jim Moroney on his blog. Highlights:

Among major metro newspapers, beginning tomorrow, we are boldly going where others have yet to go. We have some people cheering us on. They want to see this work. If it does, it will be an important strategic marker for publishers. And as I have written previously, there are others who think what we are doing is [sic] fool hearty … and that’s a polite way of describing their sentiments.

So why, beginning tomorrow, are we going to require a subscription to access much of the content we originate and distribute digitally? The reason is straightforward: Online advertising rates are insufficient at the scale of traffic generated by metro newspaper Web sites to support the businesses they operate. We need to find additional and meaningful sources of revenue to sustain our profitability as we journey further into the digital marketplace.

Consider this: There are only a few metro newspaper Web sites that generate more than 100 million page views a month. If a paper with a Web site generating 100 million page views per month sold three ads on every page every day of the year at an average $10 cost per thousand (CPM), it would generate about $35 million per year. None of those metros could operate their businesses on $35 million per year. Not even close. Dallasnews.com does roughly 40 million page views per month. As John McKeon is fond of saying: Do the math. It doesn’t work for us, either. Local newspaper Web sites are never going to scale to page-view levels that make the math work. The volume of traffic to these sites is inherently limited by the geographic nature of the content they publish.

Today, The Dallas Morning News generates 37 percent of its printed newspaper revenue directly from consumers. That’s an important diversification of our revenue base, making us much less reliant on advertising, which for our industry has been a declining source of revenue for the last four years in a row. We would like to better diversify the revenue we generate from our online businesses, as well.

Among metros, we are close to the very highest-priced newspaper in the country. Only The Boston Globe is priced higher. We are fortunate to have a very significant base of loyal subscribers who tell us that it’s worth more than $360 per year to have our paper delivered to them every day. That’s a lot of people living in this area who are telling us they value what we publish. And in order to increase that value for them, we are giving them free access to our digitally distributed content on every device on which our content appears. For everyone else, beginning tomorrow, they will need to pay.

Considering the resources we invest daily to publish the quality and the quantity of relevant and differentiated local, regional, and state news and information we do, asking consumers to pay a fair price for it doesn’t really seem like such an odd notion. Continuing to give it away for free seems to me a more peculiar idea.