This is the third article in a series reflecting on enduring findings from Audience 98, one of the major studies that helped public radio grow into the significant public service it is today.
Doug Berman, executive producer of Car Talk, was determined to make changes to the program. And for good reason. A hotel ballroom of public radio professionals had just received the first look at Audience 98’s Value of Programming results. That report helped define for stations the gross financial value of the programming they aired. Specifically, it worked out how to attribute listener-sensitive income — membership and underwriting — to various public radio programs and formats.
Audience 98 showed that Car Talk delivered the greatest financial return per hour of listening for membership dollars but performed only average for stations in delivering local underwriting revenue. The table below shows select results from the report.
Return in Cents Per Listener-Hour
|All public radio programming
|Local news programs
How to read this: The average hour of public radio listening (listener-hour) generated 1.41 cents in listener support and less than a penny in underwriting support. Add those two together to get the listener-sensitive income of 2.23 cents per listener-hour.
Car Talk generated the most membership revenue per hour of listening, but Marketplace generated the most overall listener-sensitive income per listener-hour. It was an above-performer on the membership front and blew away every other program or format in underwriting. Everyone knew Marketplace was doing well, but no one knew how efficiently the program was converting its audience into support from local businesses. Marketplace helped define what was possible when it came to underwriting performance.
Car Talk led the way in membership income per listener-hour, even outperforming the NPR newsmagazines. Until Audience 98, Car Talk was also thought of as a top performer in underwriting, as many stations reported the show consistently being sold out. There was one catch.
Car Talk’s format at the time had only one station break, occurring at roughly 30 minutes past the hour. Having a single station break in a one-hour program was very common at the time, with programmers and producers believing more station breaks could hurt audience loyalty to the program. Some stations were already asking for another break for local ID, promotion and underwriting opportunities, but the Car Talk team wasn’t convinced changing the structure of the show was the best programming move.
One of Car Talk’s hallmarks was being supportive of station fundraising efforts. The Audience 98 results prompted Doug Berman to find creative ways to add a break to the program while maintaining programmatic flow. That required rethinking elements of the show. Adding a station break also meant Car Talk would have three main segments, not two. Adding that extra station break created potential for millions of new local underwriting dollars without a drop-off in audience. And in true Car Talk fashion, it also resulted in a running gag with Tom Magliozzi anointing the new third segment as “the third half of our show.”
Public service, public support
The Car Talk story illustrates how Audience 98 connected the idealism of content creation to the realities of doing business in the media marketplace of the time by using a proven concept, ROI relative to a unit of consumption.
That unit of consumption was the listener-hour. Every program, no matter how big its budget or how many hours it is on the air, generates listener-hours. Those listener-hours represent how much of the program’s content, and by extension, its mission, is consumed. That makes a listener-hour an hour of public service provided.
By calculating revenue per listener-hour for individual programs and entire formats, Audience 98 made it possible to compare the financial ROI of programming despite the many differences among programs. It answered the question, “How much public support does this program generate for a station for each hour of public service it provides?” Stations and producers could use the information to improve everything from program design and promotion to revenue-generating strategies and tactics.
We don’t have an equivalent for this information today. We no longer know what the return is on our radio programming investments, even though they remain the financial foundation of our business. And after decades of investing in digital content, we still don’t know the financial value of digital investments relative to the public service they provide.
It’s time to start getting and sharing answers to key economic questions, such as: How much public service is that digital content delivering? How efficiently are we converting that public service into revenue? Is a digital product paying for itself, generating surplus revenue to help offset overhead, or relying on subsidies? We just don’t know, and that makes it hard to make the best possible business decisions.
In the absence of current programming economics information, here are three useful findings from Audience 98 that can help shape our thinking today.
Scale and volume
Mission is public radio’s superpower. Scale and Volume are close runners-up. Public radio delivers its expensive, mission-based programming because of its economies of scale in content creation and distribution, especially on the news side. It can cost a program producer thousands of dollars to create an hour of news content. Thanks to the network model, it only costs hundreds of dollars to create a broadcast hour. And once broadcast to a significant audience, it costs just pennies to create an hour of public service.
On the volume side, stations generate billions of hours of listening each year. Audience 98 showed stations at that time monetized an average hour of listening to the tune of just 2.23 cents. Public radio’s financial success does not come from earning a lot of money for the content it creates. Public radio’s financial success comes from making a teeny-tiny amount of money for every hour of public service it provides.
Let’s think about that listener-hour for a moment. Spending an hour with Morning Edition gets the listener seven or eight features along with 10 or so newscast stories. A national interview program introduces listeners to people and ideas they might otherwise not have access to. An hour spent listening to a music station can include up to a dozen songs. And each listener-hour is monetized for just pennies. It takes a lot of listening to fuel the public radio economy. The question going forward is: What replaces the near superpowers of scale and volume as radio listening declines?
The value of national programming
The first answer is to fight the decline. National programming has a higher financial return per listener-hour than local programming and tends to have a lower cost per listener-hour, meaning national programs deliver net revenue to help cover overhead, subsidize other programs and fund investments in growth.
Not only does the industry need to rejuvenate its existing national radio offerings, it also needs new offerings to shore up weakening weekend program schedules. They can be multiplatform programs, but they must first work as great radio to leverage economies of scale and deliver enough listener-hours to move the financial needle.
The value of national digital content to local stations is a question that needs to be answered. For example, based on pageviews, it might very well be that individual national stories have little audience and financial value to stations. That would be good information to have.
The value of local news
Audience 98 showed that regularly scheduled, locally produced news programs generated more listener revenue per listener-hour than national news programs. Not having the advantage of being on in drive time, their underwriting revenue was well below the NPR newsmagazines.
The takeaway here is not that stations could replace NPR News with local shows in drive time. That is cost-prohibitive due to economies of scale. Local programming is way more expensive per listener-hour.
Rather, the takeaway is that listeners placed a high financial value on a station’s local journalism at a time when local journalism was ruled by newspapers. The value of local news might be even higher today given the news environment, but we don’t know because we have yet to measure it. For all we know, we might not be raising as much as we could around our local news from daily users of the service. Raising more funds would help offset the high cost of local programming, perhaps giving it greater viability.
Public radio professionals started to “think audience” in the 1980s by using Arbitron radio measurements to understand how listeners used their programming. Through Audience 98, that thinking evolved to include how the public service provided to listeners translated into the financial value of programming. That resulted in a better understanding of the public radio economy, helping the industry develop and sustain its economic success.
Those basic concepts still apply. The metrics might need to be adjusted somewhat, but after a few decades of thinking “digital” and thinking “content,” it is time to develop a sharable model for evaluating the audience and financial returns on those investments.
John Sutton is Interim Chief Content Officer for New England Public Media. His 35-year career in public media has focused on the intersection of programming, audience and finances. Past roles include Director of Audience Research at NPR and VP of Audiences and Revenue at Pittsburgh Community Broadcasting, where he also served as General Manager of WESA. Prior to that, he ran his own consultancy for 20 years, serving dozens of public radio stations and organizations.