Overhauled NPR dues model provides incentives for closer collaboration

NPR is finalizing a new model for calculating stations’ membership dues that also offers options for them to save money. 

The new formula, which goes into effect Oct. 1, will have the most immediate impact on news stations. Their fees will be based on each station’s broadcast reach. The current calculation, adopted in 2019, is based on donor revenues. 

NPR projects that the proposed change will decrease its dues revenue by 15% to 18%  compared to the current fiscal year, COO Ryan Merkley told Current in an interview. NPR cited the reduced income from station fees as one reason for its May 27 workforce reduction.

The dues model will be a hit to NPR’s bottom line, but stations and NPR only succeed by working together, Merkley said. “We knew that we had to come up with a fee model that was fair and responsive to the moment but also created a way for us to work better together to serve the audience.”

For some community stations, the new fee model requires them to evaluate whether they can continue as NPR members, said Rima Dael, CEO of the National Federation of Community Broadcasters and a former NPR board member.

“For this fee model to roll out within this time … where the reality of public media is changing constantly, and everyone’s trying to find a win for revenue for their organizations — it’s hard,” she said.  

Following the rescission of CPB funds last summer, NPR provided stations with $8 million in fee relief. 

Under the new assessment policy, stations will be able to reduce their dues payments by agreeing to collaborate with NPR. The model, which is still being refined, includes three tiers of collaboration. Stations can decline to collaborate or opt for tiers that provide discounts of 15% and 20%, depending on the scale of their collaboration with NPR. 

Nearly 60% of stations will pay less for dues even if they decline to participate in the collaborative tiers, according to Merkley. 

Developing the new formula took more than a year. Through the process, stations told NPR that “they wanted choice and they wanted a way to opt in or out of how they worked with us,“ Merkley said. One key area of collaboration involves stations and NPR sharing donor information.  

“The idea is that if we collectively know the donor together, we can stop stepping on each other and prioritize each other’s asks in ways that will be better for the audience,” Merkley said. 

Audiences think that NPR and stations are “the same thing,” he added. That means it’s important to create a better donor experience by collaborating on the back end, he said. 

“Obviously, none of that is going to erase the importance of your local station and the power of the connection they have in their communities,” Merkley said. “It’s meant to have the work we do with them kind of show up in a way that the audiences expect.”

Jefferson Public Radio, a regional network based in Ashland, Ore., that reaches into northern California, is “very apt to try to collaborate with NPR,” said Executive Director Paul Westhelle. He said in an interview in early May that he questioned how NPR plans to use station donor information. 

“Are they going to send direct mail to listeners in my area?” he said at the time. “That’s a non-starter for me.” Many university licensees like JPR share this concern because their privacy policies prohibit data sharing. But NPR has since addressed his questions, Westhelle said. 

Under the criteria for the collaboration tier JPR plans to join, donor information sharing would be “limited to ‘matching’ donor data so NPR and stations can develop coordinated, not isolated, communication with common donors,” Westhelle said. “So far, this has alleviated all my concerns, and should create a productive process moving forward.”

NPR is in the first stage of planning its station collaborations, which “focuses on establishing basic donor data matching,” Merkley said in an email to Current. “As part of that, we are actively working out the guidelines, boundaries and systems for broader audience data sharing.”  

NPR also offers National Reference File-based “donor coordination” and will “not pursue network donations from individuals who are already matched to a station” via Contributor Development Partnership’s NRF, Merkley added. Nor will it “resolicit station donors who were delivered specifically through Streamlined Donation or NPR+ programs.” 

The streamlined giving program allows donors to give to stations through NPR.org. NPR+ provides listeners the option to subscribe to individual podcasts. A portion of those revenues goes to stations. Listeners can also opt to subscribe to the podcast bundle via a donation to a member station.

Still, some university stations won’t be able to take full advantage of the benefits NPR is offering through the collaborative tiers, according to Peter Dominowski, executive director of the University Station Alliance. At some stations, the primary membership database is located within a university development office, which means the donor data shared by NPR is “simply not available as easily or widely” to be analyzed and put to use. 

That’s not NPR’s fault, Dominowski added, but the limitations may mean fewer stations will be able to capitalize on the data sharing. 

“We hear the concerns regarding how some university licensees will operate within this new framework with respect to data, and we are actively working through them,” Merkley said in the email. “There is variability within the university licensee cohort in this respect. We are focused on making these new ways of working as manageable as possible, but we recognize sharing data is new and complicated.”  

Leaders of some USA stations have told Dominowski that the fee structure’s emphasis on audience reach may place stations that serve populations with lower levels of college education at a disadvantage compared to those that serve a similar-sized population with higher levels of education. “All things being equal, … the farther you’ve gone in formal education, the more likely you are to be a listener and supporter of NPR,” Dominowski said. 

“We looked to things like political makeup of the state, or propensity to vote, or education,” Merkley said in an interview. “In our modeling, none of those things actually had a meaningful impact when you looked at the end of the model.” 

Stations must notify NPR if they plan to participate in the collaborative tiers by June 30. 

Changes to the fee model for music stations are still in development. These stations have moved to a newly-defined tier of members that do not license NPR newsmagazines, according to Merkley. Core fees for the stations in this tier will not increase in FY27 and some will see a decrease. 

NPR will “work with these Members to define an updated set of relevant Member benefits and a fee structure that reflects that value,” Merkley said in the email. “All current NPR Member benefits, including music rights representation and reporting, will continue as-is while that work continues,” during the coming fiscal year.

Model specifics

The new formula relies on a calculation of the addressable households within a station’s broadcast area to arrive at its dues fee.

NPR calculates the number of households for each county where the station’s 60 dBu reach exceeds 30% of the area, Merkley said. The formula subtracts the number of households below $50,000 in annual income to determine the amount to be plugged into the fee calculation. 

Merkley called the methodology a “conservative” calculation of a station’s reach. Most stations “reach further than that,” he said, and the formula doesn’t factor in digital reach.  

“At the end of the day, we needed something that we felt was consistent and fair to be applied across all stations,” he said. 

The model does not adjust for stations with overlapping reach. Merkley acknowledged that this “introduces a kind of market force.”

Stations in regions with overlapping public radio signals will either “find their market,” he said, or conclude that the fee structure gives them a new reason “to think about a merger.”  

Stations that agree to collaborate at the most basic level will receive a 15% dues discount by opting into collaborative services such as the streamlined giving program or the NPR+ podcast bundle. They will also need to participate in “some of the data sharing,” Merkley said. 

JPR’s Westhelle said he hasn’t made a final decision about which tier to join but is leaning toward this tier. 

In the highest tier, stations will work more closely with NPR on “how we design things and how we roll them out,” Merkley said. For instance, NPR plans to rebuild its app and digital infrastructure “to support this work,” he said.

“One of the things I heard most often was, ‘We’d love to do stuff with you together but we need to be able to serve our audience in the NPR app if we’re going to use it,’” Merkley explained. “And we’re not built for that right now.”

Stations participating in this tier, details of which are being refined, receive a 20% discount. 

Stations in all three tiers, which include those who decline to collaborate, will continue to receive core NPR services, including rights to its national newsmagazines and access to backend digital services. The Grove content management system, for example, allows stations to share content with each other and NPR, Merkley said. That will not change. 

Another aspect of the tiers still under discussion is how much collaborative participation will be required for a station to receive the discount. 

NPR doesn’t expect that a station will be required to collaborate on every activity within its tier, Merkley said. 

But there will be “some places where we want to have consistent messaging, consistent promotion, and some data sharing — both NPR sharing its data and also stations sharing theirs — in ways that allow us to steward those donors together so that the experience of being someone who supports public media is consistent and not confusing,” he added. “And it allows us to do a better job of being responsive to their interests.” 

Why a new model?

NPR wanted to develop a new dues formula before the rescission of CPB funding last July, according to Merkley. 

But the end of CPB and its annual grants to local stations meant NPR “absolutely had to design a new fee model,” he said. Under the current model, NPR relied on CPB data on stations’ membership revenue to calculate member dues. That data is no longer available.

Plus, the model “punished success,” Merkley added. The more money stations raised, the more their NPR dues increased, which “unintentionally created a position where NPR and the stations were seen as sometimes at odds in areas of online fundraising because our incentives were not lined up.”

Under the new model, “now our incentive is to serve the audience best together,” he said. “That means that … NPR has got to be willing to show up and share our data. And we’ve got to invest, which is why we’re investing in the data infrastructure and the app and investing in our distribution infrastructure.” 

“We know that’s going to cost millions,” Merkley added. “But it’s a resource everyone has told us they need.”

NPR started conversations about the new dues model during last year’s annual fly-in with local station leaders. After that meeting, NPR set up seven working groups to discuss and debate a new approach to the fee model. Representatives from more than 100 stations participated in the groups. NPR collected more feedback in January through a station survey. All of that input informed the design of the new model, he said. 

Consultants from Bain & Company worked with NPR to analyze data collected throughout the process, including station surveys, workshops, meetings and working groups. The company also provided industry insights, modeling and process support before NPR developed the new model, according to Merkley. 

‘Step in the right direction’

JPR’s Westhelle said he thinks the “core” of the new fee model is a “step in the right direction.”

Using population to determine the fee is a “really positive step,” he said. That’s especially true in the West where stations must raise money to maintain expensive technical infrastructure. After securing the needed funds, the infusion of cash boosts per capita giving and drives up the cost of their dues, he said.

The current model is “regressive,” Westhelle added. “It got cheaper for stations as they got bigger and had scale, which seemed like exactly the opposite of what we should have been incentivizing at the time.” 

Westhelle expects JPR’s dues to drop from about $229,000 to around $150,000. It’s a significant drop, but — because fee changes will be phased in — it will be nine years before JPR realizes the full savings. 

The model caps the amounts that assessments can increase and decrease year-to-year:   Changes to a station’s fees will be capped annually at increases of 9% and decreases of 4%. 

For KALW in San Francisco, the new fee model will not lead to “a huge change either way,”  according to executive director James Kass. The station will see a slight fee hike if it doesn’t participate in the collaborative tiers and a slight decrease if it does.

Kass said he hasn’t decided which tier to join but is leaning toward the most collaborative tier.

“We’ve learned a lot in the last few weeks and have been promised much more info … before we have to choose,” he said.  

“NPR leadership has done what I think is a fantastic job communicating with … small stations, regional stations, etc etc., as well as to the network as a whole,” Kass said. They are “really taking the time to share their approach and also to listen to concerns and answer questions. It’s been quite impressive and I think is going a long way to building a stronger network.”

But Kass understands the frustrations of station leaders who are facing dues increases, especially those from smaller stations that are “super vulnerable” given the loss of their CPB funding. 

He doesn’t see any easy answers. “It’s going to have to play out over several years,” he said. “The fear is that a lot of these small stations close during that period of time.” 

As NFCB’s Dael sees it, the new fee model comes into effect while all public media organizations are unsettled and looking for stability. “You can’t fault NPR … for wanting to do well for themselves, for their own organizational sustainability,” she said. For small organizations, you can’t fault them for “railing against the heavens” and saying  “‘I can’t afford this,’” she said.

Even for stations that can afford the new fees, that calculus could change over time, Dael added. Many saw bumps in donations following the loss of CPB funding, and many worry that growth won’t be sustainable, she said. 

So the question becomes, “If they can afford the fees now, will they be able to afford the fees next year?”