The NPR Squeeze - Audience Is Up, Revenue Is Down
One of the most perplexing things about the media business right now is that traditional measures of success don't seem to matter. Quality magazines like The Atlantic and The New Yorker have seen their circulations rise since 2000. But it hasn't necessarily translated into financial success.
Take NPR. National Public Radio has seen a huge increase in its audience since the beginning of this decade.
NPR saw a big audience increase after the terrorist attacks of Sept. 11, 2001, and has added listeners since. Its audience has grown 47 percent since 2000, according to figures from Arbitron.
NPR's Morning Edition is the second-most-listened-to radio show in America, with an audience just slightly smaller than Rush Limbaugh's. All Things Considered slides in at No. 3. In many cities in the country, the local public radio station tops the local ratings. Nationally:
More than half of NPR's daily audience comes from its two "core" news shows, Morning Edition and the evening All Things Considered. Morning Edition's average daily audience, 7.6 million, is now about 60 percent larger than the audience for Good Morning America on ABC and about one-third larger than the audience for the Today show on NBC.
There have been many attempts at explaining the surge in public radio listenership at a time when other media has been losing audience. The commercial radio audience is down, and viewership for TV news and sales of print newspapers have fallen off a cliff. But public radio has surged. The explanation that makes most sense to me is the "flight-to-quality" argument. As TV news and local newspaper coverage has dumbed down, traditional news consumers migrated to where the real news is. And NPR, in many parts of the country, provides the only serious news coverage.
So the champagne corks must be popping in NPR's Washington bunker, right? Not exactly. The new ratings are great news, sure. But this is the same NPR that is having to seriously prune its spending.
In December, NPR cut 7 percent of its news staff and eliminated two daily newsmagazine programs, Day to Day and News & Notes. Last week, NPR said its top managers, including its new chief executive, Vivian Schiller, will not be paid for the last two weeks of this year. It will also suspend retirement contributions for these managers, and it dropped some office newspaper subscriptions.
The cuts still leave NPR with a projected budget gap of $8 million this year, based on expenditures of about $160 million, according to Dana Davis Rehm, senior vice president of marketing. Rehm said more cuts are imminent but declined to specify where they will be made, pending an announcement later this spring.
NPR's traditional business model isn't working so well:
NPR faces declining funding from all its major sources: corporate underwriters that give money in exchange for on-air mentions, charitable foundations and annual dues from almost 900 member stations. Many NPR member stations have announced staff cutbacks of their own in the face of declining listener contributions and other revenue.
NPR faces increasing pressure on its business, even when the recession ends. As consumers demand content on their own terms, NPR is caught in a squeeze. NPR supplies national programing to local member stations, who in turn pay NPR membership fees. But increasingly, listeners want to get this programming directly - in podcasts or by streaming - skipping the local stations.
To keep growing its audience, NPR has to deliver its programs in ways its listeners demand. But on-demand delivery cuts out local stations, which have relied on the big national news magazine shows to get them listeners. The more NPR delivers its shows directly to the listener, the less member stations will be willing to support NPR.
Or maybe there's another way of looking at it. Perhaps on-demand delivery helps build audience for the traditional radio broadcasts. News is regarded as an immediate and perishable commodity. It could be that podcasting supports traditional radio broadcasts because it builds the habit of listening. When listening to a show on the radio isn't possible, a listener can still get his or her fix with a podcast. Someone with a habit of listening will more actively seek out a show than someone who only listens occasionaly.
In a way, this is what professional sports teams do. They want fans to buy tickets to their games. To get those fans to lay out the big bucks a few times a year, the teams have to develop relationships with their audience. So the games are available for free on TV and radio, and once you're hooked, you're more likely to buy tickets to experience the real thing. Nothing builds an audience like making yourself into a habit. Maybe on-demand delivery is helping to boost NPR's broadcast numbers.