Thursday, July 15, 2010

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.

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3 Comments:

Blogger Jeff Hansen said...

I generally pay close attention to John Sutton. I’ve known him for a long time going back to when he was head of NPR Research, and have always found him to be a thoughtful person. In this post he is pointing out something of significant importance, i.e. that it will become increasingly risky to rely so heavily on one or two revenue generating programs. NPR has been criticized for not focusing more on issues of this type. Thankfully the Station Resource Group is working on it.

There is one thing that I would like to add to Sutton’s very cogent analysis, and that is that the answer may not be only in creating another surplus center, and Sutton calls it. A lot of programs, most of them heavily funded by CPB, have crashed and burned in the last 5 years because they were not sustainable. So we also need to get better at creating self-sustaining programs, or better yet, programming. We’re taking some small steps in the right direction here at KUOW in programming in this direction. For example, leveraging our investments in infrastructure and program acquisition and production costs through our KUOW Presents initiative, has proved to be very successful in this regard.

To briefly explain in part, we have replaced these very expensively produced but failed acquired and unsustainable programs by leveraging existing resources instead of spending more for new programs, and maintaining or increasing public service at the same time. The point is, that while creating new profit centers is important, there are other ways of moving towards a more sustainable future, that can be accomplished by individual stations.

1:55 PM  
Blogger Aaron Read said...

Based on this blog post, tt would seem that one way to solve the problem is to pound home the concept that during fundraising, you don't ask for realistic donation amounts. You ask for wildly inflated amounts. At least $200 or $300, I'd say...and maybe at least $500 or $1000.

That way you're unconsciously dragging peoples' perceptions of what is the "appropriate" donation amount up higher than they might ordinarily give.

Of course, I suggest this with far, far less knowledge of appropriate and successful fundraising techniques than John has. Use at your own risk. :-)

11:30 AM  
Blogger Heroinfuntime said...

I'm a 24 year old male, living in a trailer park, I listen to NPR for prairie home companion, and sadly that's about it. Not a lot on that channel that would get me or anyone I know into it, they need to figure out a way to get more donations, more attention from my "youtube" generation and the many industries that we have and thrive in.

Lastly, it comes down to this, with everyone having Ipods, Ipads, Laptops, Smart Phones, Netbooks and a whole world of news, music, and anything else they could possibly want in their hands, what is radio going to do to get our attention back?

1:55 AM  

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