Wednesday, September 26, 2012

Public Radio's "craigslist" Moment


The single most import strategic decision facing NPR is this:

When a fan of public radio gets into his car, pushes the start button, and gets ready to pick something to hear through his web-connected dashboard, does NPR want him to…

A.  Choose to listen to content directly from an NPR member station?
B.  Choose to listen to content directly from NPR?

Today, the entire public radio economy is based on answer “A.”  All of the money donated to public radio stations by individuals is based on listeners choosing to hear their public radio content directly from a member station.  Almost all of the underwriting money is based on answer “A” as well.   Federal funding is predicated on Community Service.  Foundations invest in being heard. 

The single greatest potential disruption faced by public radio is not that listeners will start to use digital technology.  The single greatest disruption will be that stations will not be able to aggregate listeners in significant enough numbers to grow the industry’s revenue base.

This is public radio’s craigslist moment.

You’ve heard the story about how craigslist destroyed the newspaper business revenue model by changing where and how people placed and viewed classified ads.  Just as classifieds were the newspaper industry’s most profitable source of revenue, tune-ins to NPR programs are a public radio station’s most profitable source of listening.  Take the NPR program tune-ins away from stations and the industry’s revenue model collapses.

This is especially true of NPR’s business model.  NPR collects $70,000,000 per year from stations.  An additional $40,000,000 to $50,000,000 in corporate support is directly linked to reaching tens of millions of station listeners each week.  That’s up to $120,000,000 of NPR’s annual revenue directly linked to NPR member station audiences.

Station audiences are built one listening choice at a time. When a listener can choose between NPR and a member station on the dashboard, NPR’s single most important strategic decision is if it wants that listener to first choose listening to the member station or to first choose listening directly to NPR.  The entire public radio economy rests on that choice.

There will be financial disruption in public radio no matter which strategic choice NPR makes.  The issue facing NPR is the magnitude of that disruption and how to manage it.  To do that, NPR needs to develop system-wide economic policies that put the industry ahead of the audience/financial disruption curve.

Unfortunately, NPR’s greatest weakness today is that it is ill-equipped to develop policies that can simultaneously serve the best interests of NPR, its member stations, and listeners.

NPR’s Board and Executive Management, while pushing forward hard with NPR direct-to-listener strategies, have rolled out nothing on what the public radio economy looks like when listeners begin choosing NPR before member stations.  It’s as if NPR has become policy-adverse, which startling given the invaluable role policy played in fostering the strong public radio system we have today.

While the NPR Audience was built through great network content and great programming at local stations, the public radio system was built through smart policy making. Policy was used to professionalize stations, ensuring adequate staffing and skills training.  Policy was used to set growth goals and success metrics that increased public service and financial self-sufficiency for stations, program producers, and NPR.  Policy was used to save NPR from its financial crisis.  Policy was used to develop program pricing models that fostered a more productive and less antagonistic relationship between NPR and its member stations.

NPR needs a smart economic policy today more than it needs the latest and greatest in digital technology.   Technologies change.  Adaptation will be slower than anyone expects.  In the meantime, NPR can make its single most important strategic decision. NPR can imagine a healthy economic future for NPR and its member stations. And NPR can start developing an economic policy to create that future.  It is how the public radio system was built and it is how the public radio system can grow more relevant through technological and economic change.

2 Comments:

Blogger Kim Grehn said...

There was a digital summit in the 2000's. There was a lot of talk about the future of public media in the web 2.0 world. Podcasting had a lot of buzz back then. There was optimism about shared resources and content as we looked for ways to compete in the new paradigm. It was acknowledged that public radio was behind the curve. We resolved to find, as a system, solutions to make public radio competitive on the new platforms. What we failed to do was figure out was how to generate revenues sufficient enough to support the new digital reality. (has anybody?) It seems we still haven't figured it out.
The old funding paradigm is still in place. The stations still need content from the networks to draw in audiences large enough to support them. The networks still need the audience and the revenue those listeners generate to continue providing content. So, how is this going to work as mobile media continues to make more inroads? A solution that benefits both the stations and the content providers seems logical...at least to me.

6:03 PM  
Blogger Aaron Read said...

John, someone needs to tie up every single management person at NPR, PRI/WGBH and APM and beat them over the head with this article until they absorb it by osmosis! :)

I know you've been saying this, or something like this, for a long time...but I think tying Craigslist to it might be the wake-up call people need. The word "Craigslist" strikes fear into the heart of media types everywhere, as well it should; it's the ultimate embodiment of a disruptive new technology destroying an existing platform because the platform had no strategy and no leadership for dealing with it. Nobody wants to be the "next victim of Craigslist" so perhaps people will finally start listening.

Please note: I speak for myself only, not my employer nor anyone else.

8:59 PM  

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