The Present and Future

Public radio stations have attracted a large, supportive audience by providing non-commercial public service programming focused on in-depth news, information and culture. The Internet is a disruptive technology providing a platform for content that will attract the public radio audience. It will also create competition for public radio’s funding model – voluntary user support. Public radio stations must use their incumbent advantages to establish a public service reputation on the web that parallels their reputation in broadcasting.  This calls for flexible web strategy embracing experimentation, tolerating failure, and measuring success to achieve these goals.

Present

Today public radio stations occupy a unique niche in the broadcast landscape. They have garnered a significant audience that listens for a mix of in-depth news and culture. National Public Radio serves 26 million Americans each week through programs broadcast on more than 860 non-commercial public radio stations. The audience has become accustomed to pledge financial support for the service, even though nothing prevents them from listening for free (Thomas). Since the turn of the century new challenges have arisen.

For the past five years audience growth has stalled and audience figures have even dropped slightly at most public radio stations(Janssen 2005). In late 2008 and early 2009 some stations missed revenue projections and have cut staff. National Public Radio announced in late 2008 it was laying off 7% of its staff and dropping two programs.  The Corporation for Public Broadcasting estimates that public radio revenue will drop by 13% in fiscal 2009. (Sefton, February 2009) The median age for public radio listeners is rising.  For example KUOW-FM in Seattle has seen the listener median age rise from 40 in 1993 to 50 in 2008. The aging trend has been steady. Why is public radio station audience growth stagnant? It’s not satellite radio.

Satellite Radio

XM Satellite radio launched in 2001 followed a year later by Sirius Satellite radio. Both offer dozens of channels of specialized music, news and talk. Their paid subscription model is based on the belief that customers would pay for superior programs, much like public radio. They provide programming unavailable elsewhere, like public radio. When NPR’s longtime Morning Edition host Bob Edwards left, he started on a program on XM radio.

To allay concerns of monopoly, when the two satellite radio companies launched their services they promised licensing agencies to remain independent.  But because of financial difficulties they asked and received permission from Federal regulators to merge in July 2008. Despite a steadily growing number of paid subscribers (more than 18.5 million) Sirius-XM satellite radio narrowly dodged bankruptcy in early 2009.  (Sorkin 2009)
Satellite radio is what Christenson would call a sustaining technology.   It gives customers more of what they want – radio channels and high quality audio. Satellite radio has pulled music listeners from terrestrial radio by super serving hard-core fans by providing niche channels, for example 60’s rock. But there is no indication that satellite radio has eroded public radio station’s audience. Because satellite radio programs for a national audience, it can’t compete with local programming offered on public radio. A survey of 30 thousand public listeners showed only 12% have satellite radio and only half of them expect to continue their subscription. (Jacobs 2009)

While faced with potential competition from satellite radio and other competitors, public radio stations have been working to grow their audience?

Sustaining Improvements to Public Radio Stations

Many public radio stations have started broadcasting HD radio signals.  HD is a transmission system, which allows FM radio stations to broadcast digitized audio and data along with their analog FM signal.  To receive these additional channels listeners must purchase HD radios. The audio quality of HD radio is superior to FM. Radio stations which broadcast HD can air additional channels of public radio programming not available on their FM signal – for example a radio station that offers a news/jazz format on FM can launch an all jazz HD channel. A station with a news/information format can launch a second news and information HD service with programs not heard on the FM signal or the BBC world service (Janssen 2007).  Like satellite radio, HD radio is a sustaining innovation. It provides more of what radio listeners want – choice and audio fidelity.  A suppressor to HD adoption is the cost of a new HD radio.

How could HD radio expand the audience for public radio stations? A new popular program on HD could convince people it’s worth their while to buy an HD radio. But until HD radio penetration matches FM radio listening, program directors will have a strong incentive to move the popular programs on HD to the main FM signal where it can reach more listeners. This will remove the incentive for to buy an HD radio.

Will public radio’s HD radio channels get people who don’t listen to public radio to tune in? The programming on HD is similar in appeal to the programming on public radio’s FM signal. If listeners are not attracted to public radio for free, we can assume they will not buy a new radio to listen to public radio.  Public radio programmers could design their HD stations to appeal to a new audience but they have honed their expertise in providing programs that appeal to the educated, well-resourced public radio demographic. Thus far they have not demonstrated expertise in developing programs for new audiences.

Will HD radio cause current public radio listeners to spend more time listening to radio? Increased time spent listening is an indicator of how important a radio station is to the listener. Listeners who tune in more tend to pledge more money to public radio. The problem is that radio is rarely appointment listening.  Listening patterns are determined by lifestyle and opportunity. For example people turn on the radio in the morning to listen while they get ready to go to work. When they are stuck in traffic they listen to radio. In the evening when most people are in their homes, radio listening falls sharply (People Using Radio Report). Some listeners may find some HD offerings so compelling that they will begin to listen in a time when they’re ordinarily doing something else. But because radio listening is so dependent on life style and opportunity, there is good reason to suspect that most HD tune-in will come at the expense of FM listening and cannibalize the existing FM audience.

HD radio overshoots the market. Christensen describes overshooting as providing features the customer doesn’t need for a price the customer is unwilling to pay.  Some public radio listeners may like HD offerings but so far there’s little indication they need them. Public and commercial radio stations have heavily promoted HD radio but the results have been disappointing. Only 47% of thirty thousand public radio listeners surveyed in a Fall 2008 survey said they knew what HD radio is. When those who had not heard of HD radio were read a short description, only 11% said they were likely to buy an HD radio. (Jacobs 2009)

Public radio stations are also exploring how to expand the audience by expanding and improving their analog service.

More Frequencies, Better Programming

Some public radio stations have added new FM and AM transmitters to reach un-served or underserved areas.  This strategy does build some audience. Most un-served or underserved areas have little potential for large audience growth because they have small populations.

Public radio stations and networks may find new programs or a new programming formula that will grow the audience. Car Talk and later This American Life accomplished this. Programs that successfully target a younger audience could reverse graying of the public audience.  But programmers are faced with the dilemma of continuing to appeal to current audience while drawing in a new audience. This is a challenge because appeal varies so much between age groups that it’s difficult to please them all. If this challenge is met public radio stations may be able to draw in younger listeners to replace dying baby boomers. This could keep current audience number stable, but it is unlikely to grow the audience significantly.
Public radio station managers must face the possibility that they have saturated the broadcast market for their public service programming. Everyone who likes it, listens. Everyone else has sampled it and decided they don’t want it. Fortunately there are new horizons for audience growth beyond radio if public radio stations refocus their core mission.

The Core Issue

Public radio stations and networks must closely examine what business they are in. Christensen writes that the telegraph company Western Union could have purchased Alexander Graham Bell’s phone patents for $100,000 but passed. The company managers thought they were in the telegraph business so they ignored a chance to own the telephone business. They were unable to see how the telephone would disrupt their business model.

Newspapers have operated under the assumption that they were in print business. They did not realize until too late they are in the information business and facing formidable new competition on the web. Craigslist’s free classified ads have eviscerated newspaper ad revenue. News aggregators like Yahoo! News, Google News, Huffington Post and blogs large and small have taken newspaper content freely. The result is that newspapers are shedding thousands of jobs. Their very existence is in doubt.

Why Do Successful Businesses Lose to Disruptive Technologies?

Bower and Christensen conclude that paradoxically it’s because they stay close to their customers. This allows them to succeed with their current customer base but it also blinds them to disruptive changes. Disruptive technologies have a different set of attributes from the ones traditional customers value. Bower and Christensen offer the example of Sony transistor radios that sacrificed sound fidelity, but added new attributes that proved irresistible to teenagers – portability, small size, lightweight.

Disruptive technologies look financially unattractive because it is difficult to predict how large their market may become. For managers rewarded for expertise in existing technology, there is little reward in pursuing disruptive technologies their current customers are not seeking.  But there is an enormous downside to not adapting. If incumbent businesses wait too long, they may never catch up.

What is the Business of Public Radio Stations?

Viewed as radio, public radio is doing well. Public radio stations are top-rated in many markets. They have a large and generous audience that believes in their mission. But if we shift the perspective to consider that public radio stations produce not radio, but high quality in-depth news and information in audio format, we see a different picture.  Radio is no longer the only delivery method for such content.

While public radio listening is stagnant, people, particularly young people, are flocking to the web for news, entertainment and community.  A Pew Research Center report showed that in December 2008 18% of young people considered radio a major news source. More than three times as many (59%) of people between the ages of 18 to 29 considered TV and Internet a major news source. While radio numbers rose 5% between 2007 and 2008, the Internet rose by 25%.   A tremendous potential exists to reach new audiences by the Internet.

The web has created what Hirschorn calls cultural attention deficit disorder brought on by so many choices in news, audio, video and text.
Amid the chaos, it’s difficult for a media consumer to care enough about any one thing to stick with it – and for a network trying to build allegiance to brand, convincing anyone that what you’re showing matters becomes impossible.

This chaos is confusing to some media consumers and leads them to cling to media they know, like radio. But research shows that what older media consumers finding confusing, younger media consumer find attractive. The web will not draw all of public radio’s audience, but it is likely to make a significant dent by drawing away the attention of a younger audience. This will suppress the growth of the radio audience.

The web presents a new set of attributes that encompass and expand upon television, radio and print. It has lowered to barriers to entry so that one person with a modest podcasting kit can reach a worldwide audience for a fraction of what a radio station invests to reach a regional audience. This accelerates competition. In the broadcast band public radio stations have a few dozen competitors. On the web there are hundreds of radio stations, thousands of podcasters, and millions of bloggers. Although today few audio offerings on the web rival the quality of public radio, we can expect more in the future. As Benkler writes the scarcity factor that helped industrial information economies like broadcasting and publishing evaporates with the web.

If we view public radio stations as not just broadcasters but providers of high quality news and information audio content, the competition is formidable. Because everyone can be journalist on the web, there are many more competitors providing local coverage. Neighborhood blogs provide superior micro-coverage of events that public radio stations, focused on their city and region, cannot match. In these ways the web disrupts public radio stations role as a disseminator of high quality news and information programming. But the Internet also will provides new competition for public radio’s listener-sponsored funding model.

Public radio stations have demonstrated that high quality programming can attract voluntary contributions if the programming serves the public and the radio station effectively asks listeners for financial support. News and information providers on the web have succeeded in gathering a substantial audience but they have not figured out a financial model to support their operations. Advertising is lucrative, but not lucrative enough. Charging for content has proved in most cases to be a failure because people on the web are acculturated to getting everything for free. Web site operators are beginning to eye public broadcastings’ voluntary user-funded model. A new service called Kachingle puts a virtual tip jar on bloggers web sites. When visitors click the Kachingle logo, the blogger gets a small payment. (Garfield 2009)

David Brewster, founder of the Seattle Weekly and the online regional news service Crosscut has asked his board of directors to make the web site into a non-profit organization in order to qualify for foundation support and to position itself to ask for voluntary contributions from readers.  (Reynolds 2008)  As other news providers hungrily survey the media landscape looking for a viable funding model, they will light upon what public radio stations have been doing successfully for over 30 years. This will create competition for voluntary contributions.

Beyond competing with public radio’s content and fundraising model, the web forces a reconsideration of all things having to do with communication.

How the Web Disrupts Broadcast Media

The social nature of the web upends the premise of public stations and networks that serving the public means providing information to an audience. While that will always be important, the social aspect of the web has added a new dimension.  Another way the web fits Christensen’s definition of a disruptive technology is that it helps people do something that historically required great wealth or deep expertise.  While broadcasters allow some to connect to many instantly, the web allowed everyone to connect to everyone else instantly. Clark and Aufderheide write (2009)
Public broadcasting, newspapers, magazines, and network newscasts have all played a central role in our democracy, informing citizens and guiding public conversation. But the top-down dissemination technologies that supported them are being supplanted by an open, many-to-many networked media environment. What platforms, standards, and practices will replace or transform legacy public media?

The Competitive Advantages of Public Radio Stations

Radio underwent dramatic changes the last time it was faced with the disruptive technology. The arrival of TV in the mid 20th century took away radio networks’ preeminent role in linking the nation. Radio adapted by doing more music programming, reaching out to new audiences and becoming locally focused.  Public radio stations will undoubtedly go through fundamental changes because of the new disruptive challenge of the web.  They enter the fray with advantages in technology, convenience, programming, and audience loyalty.

1. There are nearly twice as many radios as there are people in the United States. Radios are simple to use, cheap and portable. The web requires a computer or smart phone, which costs 20 times as much as a radio plus the cost a pricey high speed Internet connection.
2. Any serious competition will have to equal radio’s convenience. Many American don’t even turn on the radio – their clock radios are set to awaken them.  Thus far radio dominates listening in cars.
3. Skilled public radio reporters, hosts, producers and editors with deep knowledge of their subject areas have a track record of producing in-depth news and information programming that has strong audience appeal.
4.    The biggest advantage of public radio is the trust of a large and loyal audience. These stations know how to convince the audience to pay for a service that they could use for free.

Given these challenges and advantages here are three scenarios for the future of public radio stations.

What Was All The Fuss About?

After the early promise of the social internet lowering barriers to content creation it becomes clear that most people don’t want to create and would rather have trusted sources edit and present the information. As young people age they begin to appreciate the lack of hype and quality of information on public radio.  The median age of public radio listeners stabilizes and begins to drop. The failure to find a viable funding model stymies online news services ability to provide in-depth news. The collapse of the newspaper business creates a new demand public radio’s news and information format.

Radiogeddon

Smart phones replace radios as the mobile audio delivery system of choice. The New York Times leads former newspapers in repositioning themselves as voluntary user-supported web delivery systems for text, audio and video. Listener dollars to public radio stations dwindle. Hyper local blogs and regional news aggregators move into audio content creation, skimming off listening to the remaining local public radio offerings. Public radio evolves to all personality driven call-in programs and 24 hour on air trading posts.

Public Radio Stations Adapt

Recognizing the difficulty of addressing disruptive technology through existing organization structures, public radio stations spin off independent new media departments. Dozens of public radio stations conduct new media experiments and share their results.  These efforts have a high failure rate but eventually succeed in recapitulating their broadcasting public service success on the Internet through the thoughtful implementation of social media, effective repurposing of programming on station web sites, and easily embeddable technology allowing other sites to use their content. The stations apply their skill at asking for user financial support on air to the Internet. Listener trust and regard for public radio offerings transfers to the online offerings. By presenting the same in-depth thoughtful programming pioneered on radio while collaborating with the public radio audience to create new content, public media provides a thoughtful edifying corner of the web.

Conclusion

The difference between these three possible futures is that in the first two instances, public radio stations sit back and wait for the future to unfold.  In the third scenario they proactively attempt to shape their futures. Even if the Internet proves to be less disruptive to public radio stations than it has been to newspapers, public service broadcasters would be well served by planning for the worst-case scenario. If the threat of the Internet to public radio stations does not emerge, the downside of expanding web services is that they will not reach as many people online as anticipated. The downside of sitting pat is that events will overtake public radio stations so that by the time they decide to act, it will be too late.

Annotated bibliography

Sources

Benkler, Y. (2006) The Wealth of Networks. How Social Production Transforms Markets and Freedom. Yale University Press.

Bower, J. Christensen, C.  (January – February 1995) Disruptive Technologies Catching the Wave Harvard Business Review p.43 – 53. Retried electronically January 24, 2009 from https://eres.lib.washington.edu/eres/coursepage.aspx?cid=4174&page=docs#

Clark, J., Aufderheide, P. (February 2009) Public Media 2.0: Dynamic, Engaged Publics, Center for Social Media, School of Communications, American University. Retrieved electronically February 20th from http://www.centerforsocialmedia.org/resources/publications/public_media_2_0_dynamic_engaged_publics/

Garfield, B. (February 20, 2009)  Getting Desperate. On the Media from WNYC New York and National Public Radio. Retrieved electronically February 23, 2009 from  http://www.onthemedia.org/transcripts/2009/02/20/04

Hirschorn, M, (March 2009) The Future is Cheese. Why the networks are surrendering prime time to Jay Leno and the Lord of the Dance. The Atlantic. P. 39 – 41

Jacobs, P. (Feb 20, 2009) Presentation What are People Actually Doing: The Jacobs Tech Poll
Integrated Media Association Conference IMA Conference 2009. Video presentation retrieved electronically February 21, 2009 from
http://www.integratedmedia.org/nav.cfm?cat=15&subcat=116&subsub=196

Janssen, M.  (October 31, 2005) Audience growth stalls for public radio system. Current. Retrieved electronically February 2009 from http://www.current.org/audience/aud0520radio.shtml

Janssen, M. (Sept. 24, 2007) Multicasts: Betting to Build HD Radio Audience, Current. Retrieved electronically March 14, 2007 from http://www.current.org/tech/tech0717fmmulticast.shtml

People Using Radio Report (2008) Arbitron. Retrieved electronically March 14, 2009 from http://wargod.arbitron.com/scripts/ndb/ndbradio2.asp

Reynolds, R. (November 21, 2008) David Brewster Interview on Crosscut becoming a non-profit. The Conversation.  KUOW.  Retrieved electronically February 21, 2009 from http://www.kuow.org/program.php?id=16363

Sefton, D. (February 17, 2009) CPB: System revenue may drop $418 million in fiscal 2009, Current. Retrieved electronically February 21, 2009 from http://www.current.org/funding/funding0903recession.shtml

Sorkin, A., Kouwe, Z. (February 10, 2009) Sirius XM Prepares for Possible Bankruptcy, New York Times. Retrieved electronically February 21, 2009 from http://www.nytimes.com/2009/02/11/technology/companies/11radio.html?ref=technology

Thomas, T., Clifford, T. (June 2008) Individual Giving to Public Radio Stations, Station Resource Group. Retrieved electronically March 14, 2009 from http://www.srg.org/funding/Giving.html