Early Lessons from Planet Money’s Kickstarter Campaign

NPR’s Planet Money launched a Kickstarter campaign last week to help fund a story it wanted to produce on the life of a t-shirt. This is NPR’s first foray into direct listener fundraising.

As we wrote in previous postings and in a commentary for Current.org, we think NPR should be raising money directly from listeners but doing it in a manner that results in significant financial benefits for its member stations.  The early lessons from Planet Money’s Kickstarter campaign demonstrate this is possible.

First, The Planet Money Kickstarter campaign has all of the traits of good fundraising. The core appeal ties back to the content and the value it creates for the potential giver, the “ask” is straightforward and empowers the giver make a difference, the gift amount is perceived to be affordable and still have impact, and it is easy to give.

Second, the campaign is going well.  The outreach was modest by network standards and the goal was an even more modest $50,000.  That goal was exceeded within the first 24 hours.  In just under 8 days of a 14 day campaign, nearly 11,000 backers had contributed more than $311,000.  These are pretty good results for relatively little effort.

Third, there’s how NPR handles its relationship with its member stations as it dips its toes in the forbidden fundraising waters.

When it comes to that station relationship, there are three ways NPR can approach raising money directly from listeners.  The first would be for NPR to forge ahead without involving stations.  To NPR’s credit, it did not choose this option.

The second approach would be for NPR to treat stations as minority partners in the process. This is the option NPR chose for the Planet Money Kickstarter campaign.  NPR plans to use excess revenues from the campaign for local station training initiatives. Stations will benefit a little bit from this fundraising effort but only in ways that NPR deems appropriate.

There are several downsides to using this approach long-term, the most important of which is station financial health.  The financial impact of direct listener fundraising on station revenues will be significant.  Stations will raise less money from listeners when NPR is asking those same listeners for support. Offering free “extras” to stations will do nothing to improve long-term station finances or the working relationship between NPR and its member stations.

The third approach would be for NPR to treat stations as full financial partners in the process.  Stations will have to end up with more working revenue if NPR is to raise money directly form listeners. This is covered in our Current.org commentary on revolutionizing public radio’s economy.  It can be done and it will help the public radio system grow stronger.   

There will likely be more than $300,000 in excess revenues, maybe $400,000+, by the time the Kickstarter campaign ends.  NPR could pass that revenue along to stations in the form of dues relief during its next quarterly billing cycle.  It’s not a lot of money for each station, but it would be welcomed by almost all.

And that brings us to another benefit of the full financial partner approach.  It is the fastest and most permanent way to restore high levels of trust between NPR and its member stations.  We’ll have more on that in our next posting.

A Not-So-Modest NPR Fundraising Proposal

Little did we know when writing our last posting - "The Inevitability of NPR Raising Money Directly from Listeners" - that NPR was planning its first test of direct fundraising from listeners.

NPR's Planet Money launched a Kickstarter campaign last night, a clear experiment on NPR's part to get direct access to listeners' wallets.  The goal is a very modest $50,000 in 14 days.  That goal should be exceeded in less than 24 hours.

NPR's not the only public radio network going after listener money now. American Public Media programs have been raising money directly from listeners for several years. Last month, PRI's The World launched a campaign on Indiegogo.  This American Life has run several direct-to-listener campaigns as well.

NPR raising money directly from listeners could be very good for public radio.  That's the essence of a commentary I wrote for this week's Current, public media's industry newspaper. 

NPR could raise money in a way that everyone wins big.  NPR wouldn't have to charge stations for its programming, would have tens of millions dollars more to spend on news coverage, and NPR would be able to award significant grants to stations for local news and digital initiatives. 

That's right, instead of taking money from stations NPR would be giving stations its programs and money.

That would revolutionize the public radio economy at a time when that economy is threatened by digital disruption. All it takes is a commitment for all boats to rise together.

Click here to read the Current article - A Digital Revolution for Public Radio Fundraising.

See the links below for additional RadioSutton postings on NPR raising money directly from listeners.

Everybody But NPR
The NPR Pledge Drive Fuss

Public Radio 2018: The Inevitability of NPR Raising Money Directly from Listeners

This is the fourth installment in our series on what public radio looks like in 2018.  In this posting, why NPR will be raising money directly from listeners and doing it with the belief that it benefits NPR’s member stations.

First, some background. NPR policy prohibits direct listener fundraising.  This is to protect the business model of its member stations.  For most of these stations, listener contributions are the single largest source of income.  The prevailing belief in the industry is that, given the option, listeners would prefer giving their money directly to NPR and not their local stations.   The assumption is that the entire public radio business model would be wrecked should that happen.

It will happen.  Within five years NPR will raise money directly from listeners.  It just takes a little basic audience segmentation to understand why.

Today there are three types of NPR News listeners:

• Station Only Listeners
• Station and NPR.org Listeners
• NPR.org Only listeners

The first two types of listeners hear pledge drives and get off-air solicitations from their local stations.  The NPR.org Only listeners do not. 

The NPR.org Only audience will eventually be large enough, if it isn’t already, to be a significant source of funding for public radio.  If NPR remains banned from asking them to give, then there will be one or two or five million listeners who are never asked to support public radio.

No pledge drives.  No emails.  No letters.  No telemarketing.  No annoyance.  Such a deal.

And NPR claims that its online audience is much younger than current station audiences.  That means a new generation of listeners who will grow to treasure public radio programs with the belief that those programs are free, paid for by someone else.

Further complicating matters, the Station and NPR.org Listeners will eventually start giving less to their local stations.  It’s only a matter of time.  Every single study on listeners and giving shows that people donate to public radio because they value the entire service they receive from the station.  They give because the programming on their station is personally important and they would miss it if it were to go away.

Research also shows that listeners who use their stations less -- are less likely to give.  That will be true for people who use their station less because they are getting the programming they value from a different source.  Their station could go away.  The programming would not.  That will reduce the likelihood of giving to the station.

The entire public radio business model would collapse under this scenario.  There will be millions of new listeners who will never be asked to give.  There will be hundreds of thousands of current donors who will feel less compelled to give because they now have multiple sources for the content they value.

That will be bad for NPR given how much it relies on stations for income.  It will be even worse for stations that need excess revenue generated from NPR programs to help pay for local and digital initiatives.

And listener support is likely to become even more important if station audiences shrink in the digital age.  The fracturing of the radio audience will likely cause a reduction in business underwriting support for NPR and stations alike. On-air announcements will reach fewer listeners, lowering the number of sales and reducing the value of each announcement aired.   Plus, Federal funding will be sharply reduced or gone in five years.  The need for listener contributions will be greater than ever.

There’s only one solution and that is for NPR to raise money directly from listeners.  It’s the only way to capture giving from listeners who will have no exposure to station fundraising and from listeners who value their entire public radio listening experience across station and NPR outlets, but not enough to give directly to a station.  It is the only way to more than replace federal funding and shrinking business support.

In time, NPR will make this case to stations.  They will argue it is in the stations’ best interests for NPR to raise money directly from listeners.

Getting there won’t prove easy even when it is obviously necessary.  And NPR might not be willing to make the changes it must make to truly benefit stations.

The fundraising piece is simple enough.  NPR could be up and running with a highly effective fundraising operation in no time.  There’s sufficient evidence from markets with two NPR stations that shows many listeners will give to two public radio services if they value both.   So stations will still be able to raise significant, albeit less, money from listeners.  But collectively, NPR and stations should be able to raise more money from listeners, for less cost, than stations currently raise.

The problem is that public radio’s spending model, how money changes hands in the business, will also have to change dramatically to protect stations’ ability to serve their communities with national and local programming.

NPR will have to give up charging stations for its programs, or significantly cut back on what it charges, to take into account reduced station revenues.  That change will make or break the new public radio economy. 

If the new business model is implemented properly, with the stations’ best interests in mind, then stations will have a cash windfall to invest in local and digital initiatives. NPR will end up with more money than it gets from stations today. If implemented without the stations’ best interests in mind, then the new public radio economy will severely damage stations while providing NPR with more cash.

It is inevitable that NPR will be raising money directly from listeners in 2018.   Whether it will be done for the betterment of all of public radio is the open question.

Public Radio 2018: Sibling Rivalry

This is part three of a series on what public radio looks like in 2018.  In the first posting, we wrote:

The largest cause of any station audience erosion will come from within the public radio industry, not from outside competitors.
The reason is simple.  Public radio news and entertainment programs have developed to the point that no single source can match the sheer volume of quality content delivered on a daily basis, seven days a week.

Public Radio spends hundreds of millions of dollars annually to create its content. NPR alone invests $72 million annually in news.  Its total annual programming expense is around $88 million.   The cost of matching the volume and quality of public radio’s content is very high, especially in the digital space, where most media organizations still struggle to break even.

There are only three serious competitors for today’s public radio station audiences – the stations themselves, the networks that distribute the high quality national programs to stations, and listener indifference.

The best way for stations to keep, and indeed grow*, the audiences they have is to continue to provide a compelling mix of high quality network news and entertainment programs  during peak radio usage hours, supplemented by local content and programs produced to network standards.  Stations should extend their entire terrestrial radio brand – national and local -- into the digital space.   Stations brand should be the same across platforms and they should supplement that brand with additional content and the effective use of social media.

But this is not the strategy public radio’s networks are pursuing.  Their digital strategies prioritize network access over local access.  So today, public radio’s best radio content is now available in near-real time on the web.  For example, all of the stories in Morning Edition now post as a playlist by 7:30am Eastern Time.  A listener can now go to NPR.org and hear all of the network stories consecutively and without interruption.

Compare this to the policy around satellite radio.  The NPR Board was very concerned that running NPR News in real time on satellite radio would kill local station audiences.  And kill is not too strong of a word here.  So the board prohibits, to this day, the real time airing of Morning Edition and All Things Considered on satellite radio.

The NPR Board recognized that the biggest competition stations could ever face was NPR itself.  As mobile devices and digital dashboards become more common, the circumstance that is most likely to pull listeners away from a local FM station or its digital stream is an alternative way to get the same content.  And this is now the strategy set by the NPR Board.

Times have changed.  Significant competition will not come from a commercial news entity or a non-profit start-up.  It will be other public radio outlets.  We know this because we see it already in markets where two stations carrying Morning Edition and All Things Considered.

But there might be an even bigger competitor for local station audiences -- listener indifference.  This is already happening two ways at some stations.

First, station program offerings are suffering from too much local content for the sake of local content.   Listeners don’t tune in for local.  They tune in for interesting.  They tune in for quality.  And when they don’t find it, they are pushed away.

Second, some stations aren’t executing the programming basics as well as they used to because the energy and resources required are being diverted to digital.  Weak programs remain on the schedule.  Interstitial content fails to add value to the listening experience.  It’s an issue of quality control.  And when listeners don’t find quality, they are pushed away.

Pushing listeners away is typically how public radio stations have lost audience over the decades.  Listeners are lost when they become indifferent to the station.

That will be true in the digital age.  Increasingly stations have the means to be on all digital platforms.  They have the means to market and promote where and how to find the station in the digital space.  But if the current station offerings are diluted in the digital space, then the listeners will become indifferent.  If the station brand they know from the radio – national and local – is different in the digital space, then the listeners will drift away.

They won’t have to go far to find what they want because the most significant competitor will be in the family.

* Yes, there is still room to grow the broadcast audiences for public radio.  Most stations capture between 35% and 40% of their own listeners’ listening.  That is, the typical public radio listener spends less than half of his radio listening time with the station.  The balance of their listening goes to the competition. Better programming and promotion wins more listening from the competition.  And remember that the average weekly audience is just that – average and weekly.  Some weeks the audience is bigger than average.  And then there are those people who listen every 8 days, or 14 days, or 30 days.  Get them to listen more frequently and the weekly audience goes up.  Some studies show the monthly audience to public radio stations is 50% higher than the weekly audience.  There is room to grow the audience.  But it requires recommitting to radio growth nationally and locally.

Public Radio 2018: Radio Still Rules

This is part two in our series on what public radio is likely to look like in 2018.  You can read part one by clicking here. In this posting, why public radio stations will still be, by far, the most significant source of listening to public radio content in 2018.

Simply put, listening to public radio stations dwarfs listening to public radio content digitally.   Let’s do the numbers.

• In Spring 2012 more than 37 million people tuned in to public radio.^
• The average number of weekly tune-ins per listener is around 7.5. +
• That means public radio listeners chose to listen to public radio stations more than 13.5 billion times in 2012.
• All of those tune-ins translated into more than 8 billion hours of listening.
• Morning Edition was the biggest draw, attracting 12.3 million listeners per week.
• More than a dozen public radio programs have weekly audience of 1 million or more.

By comparison:

• This American Life claims to have one of the largest weekly podcast audiences with around 700,000 downloads per week.
• While there’s no single source of web and mobile statistics, the most optimistic estimate today is that streaming listening equals 3% to 5% of radio listening.*

In rough numbers, digital-based listening would to double every year for the next five years to equal the amount of radio listening that public radio earns today.   That is – the web-based audience would have to increase 100% over the previous year, every year, for five years.

There’s no doubt that digital-based listening in all of its forms will play an important role in growing public radio’s audience.   But the idea that digital-based listening will become public radio’s leading source of audience by 2018 isn’t realistic.

Business strategies built on the assumption that radio audiences will be less important in 2018 than they are today are likely to be failed strategies.

^Source: NPR Audience Insight & Research

+Tune-in and TSL estimates with assistance from Audience Research Analysis

* NPR reported that in June 2012, the average aggregated web streaming audience to 88 stations it tracks was just under 7,200 people.  That means that the average streaming audience to any one station was less than 100 listeners.  It does not include mobile listening. We reached our conclusion using reasonable extrapolations to all public radio stations with mobile listening included.  Got better numbers? Please share them.

On the Value of Radio

TV and Print consume people's time.  Radio makes the time people spend doing other things more valuable. 

Public Radio 2018

It’s been more than a decade since some media futurists began predicting the demise of public radio in its current form.  While there are ongoing shifts in media usage among public radio listeners, those changes have been more gradual than dramatic. 

Doomsday hasn’t arrived and, as long public radio can avoid severe self-inflicted wounds, doomsday won’t arrive.  

Over the next few postings, RadioSutton will outline what we think the next five years will look like for public radio and why.

Many of the observations might seem self-evident but we believe that they provide a framework for discussing how all of public radio can be strengthened by the very forces that others believe threaten the industry. Additional thoughts on each topic will appear in subsequent postings.  

In 2018:

• Public radio stations will still be, by far, the most significant source of listening to public radio content.
• The largest cause of any station audience erosion will come from within the public radio industry, not from outside competitors. 
• Public radio audiences will not be any younger or more diverse.
• Most public radio stations will be losing money on their digital efforts.  
• Network programming heard over the radio will still be the most significant source of income for stations and networks alike.
• Local programming on most news stations will still be losing money and require subsidization to break even.
• NPR will be raising money directly from listeners and doing it with the belief that is beneficial to its member stations.