Monday, May 16, 2011

NPR Digital Update

--- this post was updated Tuesday May 17th at 7:35a --

Several private emails in response to the last two postings on NPR's Digital Services have said NPR's mandatory fees are for new station services and not to offset the costs of NPR's direct-to-listener digital efforts.

The emails went on to explain that NPR is trying to take a leadership role in advancing station use of digital media. The idea is that stations are expected to forgo immediate return on investment in exchange for advancing their digital capacity.

Let's take that at face value.

First, it should be pointed out that NPR's mandatory fee structure does not apply to stations with Total Revenues under $1,000,000. That will be about 70-75 stations and they get the services for free.

NPR says it is subsidizing the start-up costs for the remaining stations in FY 12 and FY 13 and that those stations will pay full freight -- $4.2 million -- in FY 2014.*

In other words, NPR is taking a leadership role now by subsidizing large portions of the initial costs and spending political capital with stations over mandatory fees. Over three years, NPR is reducing its financial risk to zero, leaving that burden to stations whether they want it or not.

What's missing from this scenario?

Accountability for results.

The business model, as proposed by NPR, shows no accountability to stations for results. The plan, as presented to stations, creates a new services division inside NPR that can be funded in perpetuity without ever delivering sufficient value to stations. That's just wrong.

At a minimum, meaningful and transparent benchmarks for Digital services should be set. Those could include product usage by stations, content consumption by listeners, and revenues earned by stations.

On the revenue side, the Digital services team should be given and held to revenue goals that lead to sustainability for the greatest number of stations. Otherwise, where's the incentive do more than just make cool stuff for the web? It's kind of like the old days, when making the radio program was enough and it didn't matter if it was heard. We're smarter than that now.

A better plan, and one that would demonstrate more leadership on the part of NPR's board and management, would be for NPR to subsidize the project at 100% for the first three years. Take all of the risk and don't force any of it on stations. Give the digital team three years to create value for stations, and then put it on the market for stations to support. If stations don't see the value after three years, then then project can go away.

$4.2 million in the third year might seem like a big risk for NPR by itself, but it's not. NPR leadership has already decided to subsidize its own digital effort to the tune of millions of dollars per year.

Surely NPR can find that kind of money to invest back in the stations that deliver nearly 30 million weekly listeners and more than than $100 million in annual revenue.

If not, perhaps NPR can adopt a true public radio funding model. Create the service, give it to stations for free, and then ask stations to voluntarily support it with a contribution. Hey, it works!


* That $4.2 million includes "digital content fees." It's not clear what those are, but they might be a second charge for the programming stations are already broadcasting on-air. This is an option NPR's digital team has raised in the past. If so, the cost of these new digital services could be reduced by eliminating the double billing.

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Anonymous Anonymous said...

5:22 PM  

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