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In the United States, 50% or more of the city, county and state government reporting is done by newspaper companies.

If we go away, so does this reporting.

Not good for democracy.

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Scarcity → Abundance

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“We’re living in a world of infinite inventory. In that world, prices always trend toward zero, and that is our challenge.”

� Tony HaileFounder/CEO, Chartbeat

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To win with advertising, you have to have scale.

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Local news and information

doesn’t scale in a way that digital advertising can sufficiently pay

for newspaper newsrooms.

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The Dallas Morning News newsroom is a $30 million enterprise.

• 5 billion ads served

• $6 average cpm

• = $30 million

• Last year we served 1.2 billion ads

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19%

43%

20%

2%

16%

% of digital-only subscribers as a % of paid print subscriber base

15+% 0%

1-5%

6-10%

11-15%

Digital-only subscriptions do not appear to be a sufficient answer either.

According to our respondents, 84% had a base of digital-only subscribers that was 15% or less of their paid print subscriber base.

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Let’s use The Dallas Morning News to do the math on digital-only subscriptions:

• 250,000 paid print subscribers

• Charge $9.99/month to 15% of the subscriber base

• 37,500 digital-only subscribers$9.99/month12 months= $4.5 million/year

• That’s 5.5% of The Dallas Morning News’ annual print circulation revenues.

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Hold on!

Mobile advertising revenue.

Mobile audiences are growing like wildfire.

That’s going to be the answer.

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The good news:

Look at these growth percentages!

Paid CPMPaid CPM vs. Pr Yr

Qtr

$2.90 +1%

$2.80 +7%

$2.98 +18%

$3.44 +8%

Ad Revenue vs. Pr Yr

Qtr

Ad Imp vs. Pr Yr

QtrSell

Through

Q4 2013 +91% +67% +76%

Q1 2014 +43% +35% +80%

Q2 2014 +42% +19% +81%

Q3 2014 +50% +38% +76%

The bad news:

Look at these CPMs!!

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• Page views per month: 100,000,000

• Ads per page: 1

• Sell thru: 100%

• CPM: $3

• Annual Revenue: $3.6 million

That’s less than 2% of TDMN’s total revenue

Mobile Reality Check

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Step One:Establish a process for “sustaining innovation.”

This is different from “disruptive innovation.”

“Sustaining innovation” is the practice of improving or extending current products or launching new products you build yourself for the purpose of creating incremental revenues.

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Step Two:It is not certain that you can outrun the pace of decline of revenue related to paid print volumes only by doing sustaining innovation.

Establish a permanently staffed and funded business development unit to make acquisitions of additional channels of marketing.

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Sustaining Innovation

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Sustaining Innovation

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Sustaining Innovation

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Sustaining Innovation

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Sustaining Innovation

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Sustaining Innovation

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Sustaining Innovation

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Sustaining Innovation

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Sustaining Innovation

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Business Development

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Diversification of Sources of Revenue2010 to 2015

46%

11%

29%

5%7% 2%

Distribution of Revenue 2010

Core Print Advertising

Niche Advertising

Circulation

Commercial Printing & Dstr

Digital Adv & Mktg Svcs

Other

31%

11%30%

8%

17%

3%

Distribution of Revenue 2015

Core Print Advertising

Niche Advertising

Circulation

Commercial Printing & Dstr

Digital Advtg & Mktg Svcs

Other

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Composition of Revenue in 2010 and 2015

DecliningCore Print Advertising

Total

2010% of total

46%46%

2015% of total

31%31%

Sustaining (sort of)Niche PublicationsCirculationCommercial Print and DistributionMiscellaneous

Total

11%29%5%2%

47%

11%30%8%

3%52%

Total Revenue as Index 100 91 CAGR -1.8%

GrowthDigital Advertising + Marketing Services

Total7%7%

17%17%

Total Revenue 100% 100%

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Pinky: “Gee Brain. What are we going to do tonight?”

Brain: “The same thing we do every night, Pinky, try to take over the world.”

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“Gee Jim. What are we going to do today?” “The same

thing we do every day, Mike. Save democracy.”