What is Public Radio’s Next Surplus (Profit) Center?

Public radio is embracing its non-profitness these days. Driven by the collapse of the for-profit newspaper model, the industry’s leaders point to public radio’s multiple revenue streams as a way to save serious journalism in America.

There’s no question having 5 or 6 revenue streams is better than having one or two. Despite all of those revenue streams, public radio’s business model still depends on significant revenue surpluses, or profits, from some of its programming. Today those surpluses come from the drive time news programs and one or two specialty programs such as Wait Wait Don’t Tell Me.

Neither NPR nor stations can run their operations, let alone take on new efforts that don't pay for themselvers, if those surpluses shrink or go away. That's a real threat as listening spreads across terrestrial and web-platforms. And make no mistake about this, replacing newspapers as the place for serious local journalism will require subsidies or supplemental income beyond donations and underwriting. Tom Thomas of the SRG has been preaching this for at least five years.

It’s nice to think that major donors and foundations will always provide the funds needed to subsidize activities that can’t pay for themselves. They won’t. They never do. Major donors and foundations eventually want to fund the next new, big thing. And it’s highly unlikely that government funds will fill the gap. NPR CEO Vivian Schiller pretty much said so herself at last week’s PMDMC.

Public radio can probably make a pretty good push into the local news business over the next few years by tapping into new, philanthropic dollars. Sustaining that effort, however, will require increased surpluses from its profitable activities.

NPR's current newsmagazine pricing model doesn't lend itself to that. And NPR is talking about charging stations even more as they increase their NPR offerings on the web. If anything, surpluses from the newsmagazines will shrink in the coming decade. That means public radio needs new surplus centers. Unfortunately, no one seems to be developing those.

Public radio is currently in love with projects that draw on surpluses rather than increases them. The industry needs both or public radio's local news efforts will eventually find themselves in the same financial boat the newspaper industry finds itself in today.

The Best Fundraising News in Years

Public radio stations have a strong tradition of sharing innovative and proven practices. It’s one of the industry’s best traits and it was on full display at this year’s Public Media Marketing and Development Conference.

That’s where Minnesota Public Radio (MPR), WBEZ Chicago, and WNYC/WQXR New York shared their success in developing sustainer fundraising programs. “Sustainers” donate to the station on an open-ended, monthly basis via credit card or an electronic funds transfer from a checking account.

Sustained monthly giving has been somewhat of a holy grail in public radio fundraising and while some stations had some success with it, these stations have unlocked to route to it. MPR has dramatically increased its annual donors in the past two years through sustainer programs while reducing on-air fundraising days by 25%. You can read about it in Current, the trade publication for public radio and TV.

Nearly 40% of WBEZ’s donors are Sustainers and they account for half of the station’s membership revenue each year. Having more than $300,000 in monthly revenue has helped the station’s cash flow and allowed WBEZ to become less-dependent on traditional pledge drives.

Consumer acceptance of automatically paying for services such as Netflix probably played a big role in the success of these sustainer programs but that success was no accident. The folks at WNYC made a concerted effort to introduce monthly giving at the outset of converting WQXR from a commercial to a public radio station and they were very successful. WBEZ has developed some excellent donor-service practices to make the sustainer experience a rewarding one for the listener.

Best of all is that these organizations came to the conference as evangelists for the Sustainer approach. They backed their enthusiasm with free support materials and advice to help other stations jumpstart Sustainer programs. NPR is also making a significant contribution to the Sustainer revolution by providing listener and donor research on Sustainers.

Many thank to Valerie Arganbright from MPR, Andrew Arganbirght (yes, they are related) and Jill Shepherd from WBEZ, Lisa Torres from WNYC/WQXR, Lori Kaplan from NPR, and Barbara Appleby (formerly NPR and now MPR) for providing this leadership.

It all adds up to the best news in year in public radio membership fundraising – more donors, net revenue, less on-air fundraising, and new possibilities for creating a more positive experience for those who give to public radio. This is something every station can benefit from in the next few years.

PMDMC 2010

The gathering formerly known as the Public Radio Marketing and Development Conference is underway in Fort Worth. The word "Radio" has been replaced with "Media" in the conference title this year. This is the PMDMC not the PRDMC.

This sort of makes it official that the industry its abandoning its brand as the leading provider of radio programming. The industry's marketing mindset is that we are not radio anymore. It will be interesting to see what effect that has on radio audiences over time.

Most of the people here are in radio jobs at their public media outlets. The new conference name does raise the question, "why do we need separate public TV and public radio conferences anymore since we're all in public media now?"

Attendance is up 22% over last year and the state of the economy seems to be less of a concern among the folks I've met so far. It seems most public media outlets here had good Winter and Spring fundraising seasons.

NPR's new CFO hire has generated a little buzz given her commercial radio background. Having come from commercial radio, albeit a different era, I think it could be a good thing.

It raises some really interesting and valid questions about the spending side of the industry's business model. Commercial broadcasters, of course, try to minimize the cost of content creation. It will be interesting to see if and how that value is applied at NPR.

Here's one way to think about the difference between the commercial radio spending model and the public radio -- excuse me -- public media spending model:

In public media we have 5 hosts for 2 programs. In commercial radio they have 2 hosts for 5 programs.

Steve Inskeep voicetracking All Things Considered before he leaves each day? Nah....

Is it Really Your Pleasure?

This blog rarely delves into the content of public radio programming. This is an exception.

Public radio is known for its relative politeness compared to other electronic media, sometimes to a fault. My colleague Sonja Lee refers to this as “public radio nice.” That’s when strong words and images would be more effective but they are softened because it wouldn’t sound as pleasant. It wouldn't sound public radio. It happens in news programs, in talk programs, and in fundraising.

A component of “public radio nice” is the phrase “my pleasure.” It shows up a lot in interviews, usually at the end when the program host thanks a guest for being on the air. It’s amazing what some guests get pleasure from talking about. A few examples:

14% unemployment in Racine, WI… “My pleasure.”
The Koreas moving closer to war… “My pleasure.”
Convicted sniper to be executed… “My pleasure.”
Top Kill fails, oil still gushes into Gulf… “My pleasure.”
Failed nation-building in Afghanistan… “My pleasure.”

Maybe these guests really do find it a pleasure to be discussing such issues. After all, they are getting national exposure for being experts in their fields.

I’d like to think that the use of the phrase “My pleasure” in these situations is no more than the guests’ automatic response to the host thanking them for their time, that it doesn't reflect a true sentiment. If so, there’s not much a producer can do when that happens in a live talk show. But why is it left on the back end of edited interviews where it is entirely inappropriate?

Have the editors thought this through? Do they really believe the guest is deriving pleasure from talking about difficult and sometimes tragic situations? Or is this just another example of trying to sweeten the air sound with a spoonful of “public radio nice?”