Friday, December 13, 2013

Does Public Radio Have a Leadership Inferiority Complex?


One of the more perplexing situations in public radio is the failure of NPR to find and develop strong executive leadership from within the public radio system. It appears that that is unlikely to change as the NPR Board selects its next CEO. 
NPR has hired a headhunting firm that specializes in recruiting for technology companies. Headhunting firms are typically hired for their knowledge of a field.  It’s not unreasonable to assume that the NPR Board believes its next CEO will not come from the station ranks.
On top of that, several sources close to the NPR board tell us that the current and past CEO search committees have taken the position that no one in public radio is qualified to manage the external relationships NPR must forge to succeed in the digital age.  I hope that’s not that case.  It is a weak starting position for a search given the difficulty recent CEO’s have had managing the internal relationships NPR must repair to succeed in the digital age.
The NPR-Member Station relationship is the foundation of NPR’s business model.  It is widely understood these days that the NPR-Member Station relationship, and consequently, the NPR business model are in great need of repair.  Yet the vision, skills, and experience to affect those repairs don’t appear to be part of the hiring criteria for NPR’s new CEO.
It is unlikely that a headhunting firm will find those skills in the tech world.  Wikimedia CEO Sue Gardner lamented in her recent speech at the Public Radio Programming Conference that Silicon Valley isn’t funding start-ups with public service in mind.  It’s all about profit.  So viewing NPR’s leadership needs through a technology lens could make it doubly difficult to find someone who can be the keeper of the industry’s public service flame and cultivate healing relationships with Member Stations.
Meanwhile, across the country, there are many stations that have built strong local radio services while developing original content and improving public service, marketing, and engagement through new digital technologies. And not all of them are in large markets.
Leaders at these stations are forging the kinds of external relationships an NPR CEO would be expected to develop. They’ve proven quite capable of getting in front of foundations, major donors, and potential business partners and articulating the current value of public radio as well as a compelling vision for the future. They’ve proven quite capable of raising money in a difficult fundraising environment. They’ve proven quite capable of managing complex budgets, handling challenging business relationships and decisions, and managing large, diverse staffs.  They know how to develop original content. Many have experience as national program producers and distributors. And they are quite knowledgeable about the difficult audience and revenue issues facing NPR and it Member Stations.
There are many station leaders who have helped build public radio into the success it is today. Much of that success has come in the digital age.  But for some reason, past NPR search committees have deemed that success insufficient for leading NPR.
This sets up an interesting dichotomy. NPR’s Board searches for leaders who want to build on public radio’s great success, but does not think the leaders who are very much responsible for creating that success are good enough for the job.
It’s as if public radio has an inferiority complex; that the incredible success of public radio stations is somehow inferior to the success of other leading businesses and non-profits. Why?  Perhaps they believe it is because of NPR programming; that the qualities of great station leaders are diminished because they have the benefit of NPR content. Or perhaps they believe that station accomplishments are less meaningful because they are in radio and not some other field, like television or newspapers or digital.  That couldn’t be further from the truth.
NPR and public radio stations, together, have built a significant public service, one that has enjoyed exceptional growth as newspapers and Public TV have been in decline. The public radio system is widely admired for its contributions to improving society, its editorial and business integrity, and its current revenue model. This didn’t happen by accident and it isn’t just because of NPR programming.
Until satellite radio, there was no such thing as a national audience to an NPR program. The national audience for NPR News was exclusively an aggregation of audiences to local stations. Most of the growth that NPR claims for its programs over the past few decades is really the growth of local station audiences.  And today that aggregation remains, by far, the most significant source of listeners to NPR.
That audience success, the success so admired by the outside leaders who aspire to win the NPR CEO job, is a product of leadership at local stations. Believe it or not, it is easy to mess up an NPR News station.  It happens all the time.  Audience success at top performing stations is a result of acumen and intent beyond scheduling NPR programs at the best times of day.
The same holds true for membership fundraising, major giving, underwriting sales, and creating value in the digital space.  The best stations in each of these areas are successful because of strong leadership, innovation, and a commitment to being, and staying, the best. Those leaders are at the foundation of any success that NPR can claim for itself.  There’s no NPR success story today without strong station leadership over several decades.
It is fallacy to assume that success leading a growing public radio station can’t translate into success leading NPR. And given the failure of NPR’s last few CEOs to address the core problems harming the NPR-Member station relationship, it is fair to question whether hiring outside of public radio again will get a different result, especially if the new CEO lacks a strong public service background.
Any new hire to the position is going to have to grow into some parts of the job.  NPR’s recent CEO failures raise the legitimate possibility that a highly qualified station manager has a better chance of growing into the external CEO role than an external candidate has of growing into a successful public radio system leader.
There are several highly qualified individuals in public radio for the NPR CEO position. When it comes to recruiting potential candidates, their success should count more because it is in public radio, not less.  

Friday, October 04, 2013

Transition for NPR Highlights Major Industry Issues - Part 2: The NPR-Member Station Relationship

A recent article at Current.org highlighted some of the financial and membership issues facing NPR as it looks for its next leader.  Our last post considered the financial side.  This post considers the membership issues.

Current reported on NPR's recent customer satisfaction survey among member stations.  NPR scored well when it came to representing stations on regulatory, legislative and legal matters.  NPR received very low satisfaction scores on engagement with member stations.

It's no secret that stations have felt for many years that NPR hasn't been looking out for their best interests. The surprise here is the depth of dissatisfaction.  NPR was hoping to score 7.5 out of 10 on the engagement portion of the survey -- that is, NPR aspired to a "C+" average -- and it scored a 5.9.  On attentiveness to small stations, NPR scored 5.1 out of 10.

The low customer satisfaction scores are an especially big deal because NPR's Board is controlled by member stations. Also worth noting is that the past three NPR Board Chairs have come from medium-sized stations, not large stations. 

There's a long history of tension between NPR and stations over financial, audience service, and governance issues.  That tension has grown in recent years as NPR's digital efforts allow more listeners to get content directly from NPR.  This "bypass" is a scary proposition for NPR member stations and most stations view their control of NPR's board as the last line of protection against NPR grabbing their listeners and donors. 

The thing is -- it's not working at that well.  Stations can wield their governance power to prevent NPR from doing some things but they can't seem to use it to get NPR to act in their best interests. The recent satisfaction survey is evidence of that.  Member stations control the Board. Through their votes they control which station managers sit on the Board,. Yet with all of this control at the top, NPR still gets an "F" on customer satisfaction among member stations.  Station control of the Board isn't translating into a better NPR-Member Station relationship. 

So where's the disconnect?  It's easy to blame the executives in charge at NPR but perhaps the issue still rests at the Board level.  Here are two factors to consider.

First, NPR's Mission and Vision statement doesn't embrace helping member stations succeed. Even though NPR is a membership organization, the Board has not charged the executive leadership with serving member stations.  The mission statement says NPR partners with member stations. It says NPR represents the member stations in matters of mutual interest.  But it is silent about NPR acting in ways to help stations succeed.

The second factor, and this is probably linked to the Mission/Vision statement, is the role of the CEO/President.  Recently, the NPR Board has taken to hiring leaders of NPR but not leaders of the NPR membership, and certainly not leaders of the public radio system. That has to change if the NPR Board wants to repair relationships between NPR and its member stations.

More in our next posting.

Thursday, October 03, 2013

Transition for NPR Highlights Major Industry Issues - Part 1: Financial

Current.org has a good read on some of the financial and membership issues facing NPR as it looks for its next leader. 

On the financial side, Current reports that NPR had its best fundraising year ever in 2013, yet ended the year with a $3 million budget deficit.  It was a remarkable comeback given that the project budget deficit was $6.1 million. 

The lesson here is that public radio doesn't have a fundraising problem, it has a spending problem.  This is not only true for NPR, it is also true for many public radio stations.  Many stations are raising more money than ever, but struggling to make ends meet.  Additional investments in digital and local news aren't coming close to paying for themselves.

According to Mark Fuerst, who is leading the Public Media Futures Forums, this financial pressure is greatest on medium and smaller stations.  Revenues are growing for the largest 50 stations, but the smaller stations are struggling. That has to change soon or these stations will find themselves facing the same situation as NPR -- having to shed staff to make ends meet. 

How does it change?  Here are two necessary steps.

1.  Restructure how money changes hands in public radio.  After salaries, national program acquisitions are typically the largest line item in a station's budget.  The basis for those programming fees is an economic model rooted in 1990s media market dynamics not today's digital media marketplace. Restructuring the public radio's internal economic model could free up much needed resources for the smaller stations while ensuring that NPR and other national program producers have the resources needed to create high value programming, programming that generates loyal listeners and surplus revenues nationally and locally.

2.  Start applying financial success metrics to digital and local content efforts. Station managers need  to know how much public service these activities really provide.  They need to know if there are real returns in terms of public service provided and net revenues against direct expenses.  They need to know how close these activities come to breaking even.  And if they aren't at least breaking even, they need to know how much subsidization each activity requires. Having a handle on those metrics will help managers make smarter financial decisions whether there is a financial crunch or not.

In the next posting, thoughts on the troubled NPR-Member Station relationship.

Tuesday, October 01, 2013

Keep Hitting Listeners Right Between the Ears

Below is the original text from John Sutton’s acceptance speech after receiving the Don Otto Award from Audience Research Analysis and the Public Radio Program Directors association.  You can hear the speech here.  Just like live radio, what was written and what was said varied some.

It’s an honor to receive an award in the name of Don Otto, whose all-too brief career helped launch PRPD and professionalize the job of public radio program director. 

The first time I met Don was in 1987 at one the PD Bee workshops he helped to organize.  Those workshops were a critical beginning to the success and relevance public radio has today.

One of the key themes of those workshops was helping PDs understand what business they were in.  Many thought they were in the “be all things to all people” business.  Others thought they were in the museum business, that their stations existed as a place to preserve the failed programming of commercial radio.  Polka anyone?

What program directors learned during the PD Bees was that they were in the public service business… more specifically… public service delivered via the ears.  They learned that public service was NOT what they created… but what was consumed… what was heard. 

Here we are, a quarter century later, and as an industry public radio is again questioning what business it is in.  And by “business”I mean the activities that generate the money that pays the bills.  The value proposition. 

Is it the radio business?  The journalism business?  The content business. The public media business?  Honestly, do listeners even know that that even means?

How about none of the above?

The significant service public radio provides,  the market niche public radio owns, the one that keeps public radio in business is not radio.  Radio is a technology.  And it’s not journalism.  There are hundreds of places to find good journalism.

No, the service that you deliver, the service listeners voluntarily support with money is helping people find meaningfulness and joy in life while they are doing other, mundane things.

It's not just the content.  It's how and where the content gets to them, how it fits into their lives.  That's what listeners support with their money.

Again, the business you’re in today is helping people find meaningfulness and joy in life while they are doing other, mundane things.  And you are the best in the world at doing that.

I just started a new reserch company that measures the emotional connection public radio listeners have with NPR, and with their stations.  Let me tell you two things we’ve learned and reaffirmed.

First, your listeners believe that the act of listening to public radio is part of doing something good for society.  Think about that. For your audience listening is doing good for society.

Second, your listeners believe that listening to public radio makes them better people.  You make them feel smarter.  You contribute to their sense of happiness.  You help them connect to people and ideas that enrich their lives.

You help people lead more meaningful personal and civic lives while they are doing the mundane -- shaving, dressing, making coffee, sitting in traffic.

You don’t occupy their time.  You make the time they spend doing other things more valuable.

Sometimes you do that with journalism.  Sometimes you do it with music.  Sometimes you do it with entertainment.

That was the essential lesson Don Otto, and many others, were trying to help program directors learn in the 1980s.  That lesson still applies today.

You’re not a hospice for dying radio formats or, for that matter, local journalism.  And digital technology?   It’s just that –technology -- another means to the end.

The end game is the same today as it was in the 1980s. 

Keep hitting listeners right between the ears.

Keep getting better at turning the most mundane, routine activities into meaningful moments.  And when you think you are good as you can be, find ways to be even better.

That was what Don Otto brought to public radio.  It is an honor to receive this award in his name.  Thank you. 

Thursday, September 05, 2013

Introducing Emodus Research and Sutton & Lee

A couple of business announcements as the RadioSutton blog returns from a few months off this summer.

1.  Introducing Emodus Research, a new company created by John Sutton to help public radio professionals identify and leverage the emotional connections that drive listening, brand loyalty, brand advocacy, and giving.  The initial service offerings from Emodus Research will be for public radio stations and program producers.  Subsequent services will be available to public television.

2.  John Sutton & Associates is now Sutton & Lee.  Sonja Lee is now running the on-air fundraising side of things.  John is still heavily involved in pledge drive planning and preparation. He also continues to help stations with strategic planning and Arbitron analysis.

Emodus Research

Question:  In a world with smart phone apps and digitally-equipped cars, why would someone choose to listen to an NPR report from a public radio station when they could hear the exact same report at the exact same time directly from NPR?

Answer:  Because he or she has a strong emotional connection to the station.

Question:  What does a strong emotional connection look like?

Answer:  We're finding that out now.

Emodus Research has already conducted several thousand on-line surveys with public radio, public television, online, and print news consumers across the country, with an emphasis on the public radio news listeners.  We've researched the emotional connection NPR News listeners have with NPR and we're researching the emotional connection NPR News listeners have with their stations.

The results will identify the key emotional drivers that lead to increased listening, brand loyalty, brand advocacy, and giving. 

Public radio stations will be able to identify specific actions they can take in programming, branding, marketing, social media, and fundraising to build emotional connections strong enough to keep listeners, advocates, and donors from leaving when NPR and other public radio alternatives are just as easy to hear.

You can learn more by visiting the Emodus Research website.

There's also an Emodus Research blog where you can follow our progress as we gain new insights about the relationship public radio has with its listeners and donors.

Thursday, May 23, 2013

NPR, Its Member Stations, and Trust

Trust is a funny thing in public radio.  The industry’s business model is built on listeners trusting what they hear on public radio and public radio trusting that listeners will voluntarily pay for content they get for free.  It’s been a pretty good business model for the last several decades.

Yet within the industry there always seems to be a large measure of distrust between NPR and its member stations, the very entities that deliver the highly-trusted, highly-valued content to listeners.
 
We’ve been reminded of that distrust quite a bit since Current published our proposal for NPR to raise money directly fromlisteners.  Everyone agrees NPR-direct fundraising would be effective.  Some think the idea is great, in principle, but need more details on how it would work.  Equal numbers disagree with the economic model we proposed and believe that effective fundraising for NPR would be disastrous for stations.  Almost all questioned whether NPR could be trusted to act in the best interest of stations if given this fundraising power.

This level of distrust isn’t new.  It existed in the early days of NPR, through decades of impressive audience and revenue growth, and into this age of digital disruption.  That distrust existed, to different degrees, no matter who was sitting in the President’s office or who was second-in-command at NPR.  That distrust has spanned a couple of generations of station managers.

Multiple trust-building efforts and exercises haven’t been able to exorcise the distrust.  It is institutionalized.

Institutionalized distrust goes all the way back to the early 1980s and NPR’s financial crisis.  It’s worth reading up on that crisis if you don’t know the story.* In short, the entire public radio business model was overhauled to save NPR from going under due to financial mismanagement and many stations backed a loan to as part of the NPR bailout.

Back then member stations had to vote on NPR’s budget every year, with board members and some station managers questioning line item expenses of just a few hundred dollars.  NPR’s annual membership meetings were rancorous affairs that always ended with NPR getting budget increases and all parties leaving with bitter feelings.

There were also difficult battles over macro and micro programming issues, from a 4pm Eastern Time start for All Things Considered to giving stations more local cutaway opportunities in the newsmagazine program clocks.  Every year stations were paying NPR more money but not getting the attention, respect, or services they felt were needed to grow.  Seeds of distrust were sown.

Fast forward to today.
  • Most stations are paying NPR somewhere around 15% of their gross revenues for the rights to broadcast NPR programs.  That’s the highest percentage in the history of the industry.
  • NPR now requires stations to pay for digital services whether they want those services or not.
  • NPR is now competing directly with its member stations for listeners.
  • NPR is now competing with stations for major donors.
  • NPR is experimenting with raising money directly from listeners for the first time. 
To summarize, stations pay NPR a lot of money and NPR remains an obstacle and threat to station audience and revenue growth.  Some things never change.

There have been times when the bonds of trust have been stronger than others.  Sometimes those bonds were strengthened by people at NPR and at stations. Those bonds lasted only as long as the people lasted in their jobs, sometimes less than that. On a few occasions, those bonds were strengthened by new policies at NPR.  Those bonds had more staying power.

One policy in particular was NPR’s decision to “lockdown” pricing for its news programs at a fixed percentage of total station revenues.  That change in policy -- how money changed hands in public radio – went a long way towards improving the NPR/station relationship.  It put an end to the battles over NPR’s budget and created a stable and predictable economic model that allowed NPR and stations to invest their money and energy into program and revenue growth.

The lesson – the bonds of trust between NPR and its member stations are just as much about policy as people, maybe even more so.  A certain measure of trust can be institutionalized.  Or perhaps more accurately, a certain measure of distrust can be prevented through good policy.

That’s going to be important in the next few years.  Public radio continues to get severe warnings from experts inside and outside of public radio about the dangers of digital disruption.  That disruption is already a source of increased distrust between NPR and stations.  The disruption will only become more severe with time.  Greater distrust will follow unless NPR and its board choose policies to minimize it.

One way to build trust is flip the public radio economic model on its head.  NPR will never build sufficient trust with stations as long as it is charging stations more money than ever while actively taking listeners and donations away from those stations.  Conversely, NPR could lay a strong foundation for trust by putting in place policies that put money in stations’ pockets and helps them grow audience.
 
We think our NPR fundraising proposal is a valid approach.  We’ve also fielded several other ideas since our proposal was published.  We will explore some of those in the coming weeks.


* Amazon link to "Listener Supported" by Jack Mitchell

Tuesday, May 07, 2013

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.