Dolan Media Makes Internet Primary Outlet

A strategy derived from necessity worked so well it's now driving the entire company.

In the aftermath of Hurricane Katrina, Dolan Media's New Orleans-based media properties;which includes City Business, The Daily Journal of Commerce and a $4 million-per-year custom publishing business;turned to the Internet as their primary media outlet out of sheer necessity. That strategy paid off so well that the Minneapolis-based publisher is now adopting the same "Internet first, print second" formula across its entire portfolio. "Everything we do now we do for the Internet first, then re-sculpt for print use," says CEO Jim Dolan. "That's upside down from what we used to do and what most publishers still do. The New Orleans area was the first to do it for us and under extreme duress proved it to be a viable business model. We're doing it to about two or three properties a quarter and it will take us a couple years to implement it all the way through."

So far, the emphasis online is also paying off in print via packaged deals. "It's a different budget you're tapping into, so we find plus dollars available to us," says Dolan. "It sounds contradictory but we're able to get people to buy both to a greater extent. We're doing online symposiums with a print component attached, so it can direct advertising to both. The variable pricing that Google has taught us all is proving very popular with advertisers." Online page views are up about seven-fold from what they were last fall, according to Dolan. "It's a very steep curve and we've not yet hit the ceiling on it," he says. "We've tapped into some things we didn't expect." Dolan is hesitant to say what the specific effect on revenue has been so far. "We're getting the same question from banks and investors, and because so many things now are combo-buys, it's really a judgment call," he says. "Before Katrina, online was 5 to 7 percent of revenues, today online is about 18 to 20 percent. The lesson we learned is we didn't have to replace the revenues; it's the profits we had to replace. The margins are so much higher online, I can replace one-third of the revenues and have the same profits. If I replace half the revenue, I have much bigger profits."

Local Titles on the Mend
In New Orleans, Dolan's City Business flagship is profitable now and has recovered two-thirds of its previous advertising volume. "That may not sound like much but it's a big deal to us," Dolan says. "We've pumped up our rate card and there are no discounts. We've also adjusted our cost structure;not by reducing people but by producing more publications from the same shop."

Last fall the company launched a newspaper called The Journal of Jefferson Parish and has also expanded the coverage of its daily construction publication from Mississippi and Louisiana to the entire Florida panhandle. The company's regional consumer magazine, City Life, remains suspended although Dolan may revive it later this year depending on the economy.

Circulation for the New Orleans properties has stabilized at about 14,000 right now and is growing about 10 percent a month;the same growth rate as before Katrina. "We've suspended serving subscriptions for people we couldn't find," Dolan says. "For those we've found, there hasn't been a single one who's said, No, I don't want to continue.' However, we have not been able to find about one-third of our subscribers. They're just gone."

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