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


Anonymous Anonymous said...

If NPR cared that much about their member stations, why would they ever allow the Delmarva Market to become so over-saturated with competing Public Radio stations? More stations= more stations purchasing ATC or ME. That is, I'm afraid, all they care about.

2:47 PM  
Blogger RadioSutton said...

That's a good question. The situation in Delmarva is not new. NPR has wrestled with this issue for several decades, including when I was there from 1987-1997. Here are some of the considerations.

NPR is a membership organization first and a network second. As such, NPR does not have a tiered affilate structure. There are no primary or secondary affiliates. Any member station in good standing can buy any program.

I was part of several committees at NPR that considered changes in membership/programming pricing and policy and we looked at moving to a tiered affilate structure. There were few upsides and many downsides. Money was an issue, but many of the disadvantages of the tiered structure had nothing to do with revenues.

Most important, NPR has no authority to dictate how a local station defines the community it serves or how it provides that service.

And NPR should never have that authority. If it did, the smaller stations such as Delmarva would suffer more than the larger stations.

NPR would use policy and pricing pressure to get more NPR programs on the air to the detriment of other producer/networks and local programming. Stations with larger audiences would be able to resist that pressure because of their importance to NPR's national underwriting sales.

5:08 PM  
Blogger Mark Finkel said...

I strongly agree that starting up a website takes patience and engaged, continuous involvement with your audience and neighboring communities.

5:35 PM  
Anonymous Anonymous said...

Thank you for providing that link to Listener Supporter--I had no idea such a book existed. I just ordered it & am looking forward to reading it.

5:00 PM  

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