Public Service Begets
Public radio is nearing a major economic milestone. Maybe this year, maybe next, over half of its revenues will come from listener-sensitive public support i.e., the people who listen to it and the businesses that underwrite it.
At that point, public radio will enter a new phase in its public service economy. It will continue to draw upon a mixture of funding sources, including licensee and tax-based subsidies. But unlike today, more than half of its revenues will be listener-sensitive and under its direct control.
This self-reliance brings to the fore our ability to generate public support actually three skills combined:
Our ability to provide programming of significance.
Our ability to reach a significant listening audience.
Our ability to convert public service into revenue into public support.
Our ability to provide significant programming to significant audiences is the definition of "public service" (explained at length in previous AUDIENCE 98® and other reports).
In other words, public service happens when program directors create services that are both heard and valued by their communities.
We call this the P-Factor with "P" standing for public service, the programming upon which it is founded, or the potential that it offers for development take your pick.
The potential for public support lies latent until development professionals convert it into listener and underwriting income.
The effectiveness of this conversion is called the D-Factor, with the "D" standing for development effectiveness, development professionals who make it happen, or their ability to deliver on the potential again you can take your pick.
When multiplied together, the P- and D-Factors yield public support.
By linking public support to the programming that causes it, AUDIENCE 98 diagnoses how well the two factors interact today and suggests how they might better interact in the future.
Public support is the product of our public service (P-Factor) and the effectiveness of our development efforts (D-Factor).
Public Support of Programming
Listeners gave $140 million to public stations in FY 1997; underwriters gave between $60 million and $75 million.
Morning Edition and All Things Considered (the seven-day shows) generate 34 percent of all listener support ($46 million) and 59 percent of all local underwriting income (between $35 million and $44 million). Yet they account for only 27 percent of all listening.
Compare this to locally produced music programming, which occupies the bulk of many stations schedules. It generates almost twice as much listening to public radio as NPRs newsmagazines, yet it yields only slightly more listener support ($48 million) and far less underwriting revenue ($12-$16 million).
Gross Value to Listeners
The explanation for musics lower listener support is simple. Local music is less valued than Morning Edition and All Things Considered.
Local music generates a lower return per listener-hour (1.1¢ vs. 1.8¢) which, as discussed in The Value of Programming, is a proxy for the value they place on it.
Listeners also consider local music less personally important; that is, they are less likely to say its " an important part of my life; Id miss it if it went away."
If we could make local music more important to listeners, not only would we provide a greater public service, wed also earn more support.
Gross Value to Underwriters
The explanation for musics lower underwriting support is not as evident, although evidence points to the D-Factor.
Given their levels of public service, the underwriting potential of local music dayparts is far higher than we are realizing today.
Indeed, this potential exists across all dayparts. Stations currently bill 1.7¢ per listener-hour for spots aired in NPR weekday newsmagazines. In contrast, they bill an average of only 0.6¢ for all other programming.
If stations sales staffs pursued strategies to underwrite all programming at the same level as Morning Edition and All Things Considered, they would more than double their annual gross sales from an estimated systemwide $60-$75 million to roughly $140 million.
Such a goal is possible: leading stations perform at this level today. Achieving it would have a profound affect on the public service economy:
At $140 million, underwriting would tie listener income as public radios single largest source of revenue.
Even if it costs 20¢ to earn each new dollar, the net could replace public radios current federal appropriation.
Thats with no change of programming or increase in listening just a systemwide strengthening of the D-Factor as it relates to underwriting.
This graphic shows how the P- and D-Factors interact. Stations are plotted horizontally by a key component of their public service (listener-hours per year). They are plotted vertically by the effectiveness of their development efforts (financial return per listener-hour). The larger the box defined by the stations point, the greater its public support (in dollars per year).
The arrow shows the system average of 2.2¢ per listener-hour 1.4¢ from listeners, 0.8¢ from underwriters. A stations appearance above the arrow suggests a strong D-Factor i.e., development is converting public service into public support at a higher rate than the system average; appearance below the arrow indicates a weak D-Factor.
An Ecological Balance
The components of the public service economy work together in a delicately balanced ecology. And in such a system, "you cant change just one thing" (as the Zen master once said).
Strengthening the D-Factor might involve adding more underwriting spots or airing higher profile messages. Yet givers say theyd be less likely to send money if on-air mentions of business support became more annoying.
Whether they will deliver on this threat is unknown. But like the possibility of global warming its a specter of damage that must be taken seriously.
Programmatic symbiosis offers another example of interdependence. Some programming survives only because other programming exists. For instance, national news generates a financial surplus at most stations. Some stations feed the surplus to their local news endeavors; other stations use it to nourish their music programs.
As we evolve to meet the challenges of a harsher media environment, we may have to weigh the benefits of symbiosis against its cost. There are benefits. But unless we manage them both locally and nationally extinction may face programs that cost more than they return in public service and support.
The balance is ours to maintain or lose.
The responsibility of self-reliance carries with it the privilege of self-direction. Many decisions were made for us in the old subsidized economy. Our mature, public service economy places these decisions and our future squarely under our control.
AUDIENCE 98 Core Team
For More Information
The arrival of the public service economy is no surprise; its a simple function ofFinancial Maturity.
Twenty years ago WBUR was Bostons "other" station. Today it is one of the nations premier public stations on virtually every measure. Its ability to convert public service into public support is unparalleled. Jay Clayton, Marketing Director, explainsHow We Do It.
ManagingParsimony assumes greater importance in the self-directed, self-reliant public service economy.
So does our approach to programming arithmetic. Typically viewed as an expense, programming generates both public service and financial returns. AUDIENCE 98 determines its current gross value to Listeners and to Underwriters. Its potential value is yet to be fully tapped.
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Public Service Begets Public Support Financial Maturity How We Do It Parsimony Listeners Underwriters
Audience Research Analysis
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Revised: September 01, 2000 12:38 PM.