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, 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 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.

Wednesday, May 01, 2013

A Not-So-Modest NPR Fundraising Proposal

Little did we know when writing our last posting - "The Inevitability of NPR Raising Money Directly from Listeners" - that NPR was planning its first test of direct fundraising from listeners.

NPR's Planet Money launched a Kickstarter campaign last night, a clear experiment on NPR's part to get direct access to listeners' wallets.  The goal is a very modest $50,000 in 14 days.  That goal should be exceeded in less than 24 hours.

NPR's not the only public radio network going after listener money now. American Public Media programs have been raising money directly from listeners for several years. Last month, PRI's The World launched a campaign on Indiegogo.  This American Life has run several direct-to-listener campaigns as well.

NPR raising money directly from listeners could be very good for public radio.  That's the essence of a commentary I wrote for this week's Current, public media's industry newspaper. 

NPR could raise money in a way that everyone wins big.  NPR wouldn't have to charge stations for its programming, would have tens of millions dollars more to spend on news coverage, and NPR would be able to award significant grants to stations for local news and digital initiatives. 

That's right, instead of taking money from stations NPR would be giving stations its programs and money.

That would revolutionize the public radio economy at a time when that economy is threatened by digital disruption. All it takes is a commitment for all boats to rise together.

Click here to read the Current article - A Digital Revolution for Public Radio Fundraising.

See the links below for additional RadioSutton postings on NPR raising money directly from listeners.

Everybody But NPR
The NPR Pledge Drive Fuss