NPR Plans Mandatory Digital Tax on Stations

NPR is unveiling an expansive network-station digital strategy at a series of meetings around the country. NPR is promising the moon to stations and ending the presentation with a “business model” that is nothing more than a mandatory tax on all stations for NPR digital services, whether the station uses the services or not.

That’s right, NPR management wants to force stations to buy its digital services package for up to $99,500 per year even if the station doesn’t want to use those digital services.

The presentation suggests that stations will earn revenue by using NPR’s digital services, but no revenue projections are given. A station paying nearly $100,000 per year has to take it on faith that it will see a return on its mandatory investment in NPR services.

It’s clear that NPR’s primary goal behind this strategy is to raise cash for its national digital services, which continue to lose money. NPR wants stations to believe, without showing revenue potential, that they can profit through NPR’s digital services even though NPR itself cannot.

When the NPR board adopted listener-hour pricing for the newsmagazines, it established the principle that the return on investment for stations should be at least 100%.* That same principle should apply to NPR’s digital services.

A true business model would show stations a meaningful financial return on their investment through new revenues, not cost-savings. Heck, a true business model would require NPR digital services to compete for a piece of the station’s budget. Instead, the “business model” taxes the revenues stations raise from their broadcast operations to fund NPR’s money losing, direct-to-listeners programming service.

None of this should be surprising, however, given NPR’s approach to digital in the past 24 months. Every time NPR has talked about partnering with stations on digital, it has talked about charging stations money.

That’s not partnership talk. Think about it. How many businesses talk publicly about taking money out of their partner’s wallet? Even fewer talk about forcing their partners to give them money when the partner doesn't want to participate in the venture.

It looks as though the Vivian Schiller station-relations philosophy has yet to leave the building.

* Stations currently derive a larger gross return on investment on the newsmagazines. The 100% return rate is actually too low on a gross-revenue basis to sustain stations so the pricing model never reached that threshold. If NPR ever pushed rates that far, many stations would have to drop All Things Considered and maybe even Morning Edition.

Disclosure: JSA provides consulting services to Sky Blue Technologies which offers Listener Interactive mobile apps and web streaming services to public radio stations.

Grow the Audience: Entrepreneurship is Key

The Grow the Audience report Proposals for New Media Investment includes the following goal:

"Create a universal Public Radio Player, an embeddable slideshow and playlist-enabled web player for station and other websites, allowing access to all public radio streams, on-demand content, and localized choices from stations."

The report also says public radio should be spending up to two million dollars a year to develop such players. It shouldn't cost that much.

For public radio to succeed in the open marketplace, it has to stop spending like the subsidies will always be here. The industry overspends on projects because of these subsidies. Continuing that practice will only hinder, not help, public radio when the subsidies dry up. Building budgets and spending money based on the old business model doesn't make sense in the new marketplace.

Read what the universal public radio player is supposed to do. 90% of it is already available in the Listener-Interactive web player, which was created by a few entrepreneurs for far, far less than the numbers in the Grow the Audience report.

You can see a demo of the Listener-Interactive web player here. There is a companion iPhone app with the same functionality. This user interface will transfer to dashboards when cars start coming with mobile broadband functionality.

JSA has been working with Listener-Interactive to develop this listener-focused tool so there will be revenue opportunities for stations. There are also collaborative revenue possibilities that could benefit program producers and networks as well.

More on that in a future posting.