NPR CEO Vivian Schiller

Radio towers gone in 10 years?

The most surprising comment she made was her assessment that the business of distributing audio programming via radio towers would be largely gone in 10 years. Though not a direct quote, here’s the transcript-like version:

Some smaller affiliates weren’t really set up for digital, so we had to provide tools for them so they could be part of the process. Some of this was tools for photos, etc. But fundamentally, helping them deliver audio streams. Radio towers are going away within 10 years, and Internet radio will take its place. This is a huge change and we should embrace it. Mobile will play a big part. [emphasis added]

I’m as big into new media as anyone, but even I was shocked that NPR’s CEO would make such a bold statement. Perhaps it was a heat-of-the-moment kind of thing. I don’t know.

Certainly Internet-delivered audio streaming and audio programming (not to mention, video, text, etc.) is gaining ground on old-school delivery technologies. But a 10-year countdown on radio transmission strikes me as a bit fast. This is a generational change, a slow process. Consider the strikes against this prediction:

• Audio programming, as practiced by NPR and her affiliates, is still a mass media experience — it’s not personalized or socialized to individuals. “We report, you decide” is the model. For that, mass distribution via radio makes a lot of sense. It’s more efficient for most use-cases in play today (listening during “down times” to and from work, running errands, at the desk, on weekends).
• Car-based Internet access remains experimental today. Yes, I can take the iPhone in the car, keep it hooked to the Internet and stream audio, playing it back on the car stereo. But that’s still a wonky process only geeks could love. My 70+-year-old mother has an iPhone and loves it. But she’s not listening to radio on it. And certainly not doing that while hooked up in the car.
• Mobile Internet access, especially at mass quantity, is getting more expensive, not less. AT&T’s repricing moves announced yesterday are part of that trend. Carriers, knowing the incredible capital expenditures required to build out towers, backhaul and more, can price their service in ways that lock out casual users. For those casual users, radio remains a free alternative.

And there’s more. But there are also factors that support Schiller’s contention from the user perspective:

• New cars are already starting to get live Internet and “sync” capabilities. It’s still rare and a little pricey, but it’s here and it will grow. When your car has a simple media center in it that syncs (downloads podcasts) via WiFi when it sits in your garage or driveway, new possibilities appear.
• The staggering majority of news is not real-time in nature and does not need live streaming. Therefore, a fast record/deliver model could supplant radio broadcast for almost all NPR programming. What if Morning Edition was delivered to the car very, very fast, and it was ready for you when you turned the key in the ignition for the morning commute? A super-fast podcast may be all you need 99% of the time. Local station? Not needed for transmission. Indeed, a local station would just get in the way.
• It’s easy to imagine a phone/car ecosystem that will unite the two in consumer-friendly ways. I’m not talking about hands-free speakerphones, but much more. Consider the possibilities when a car with WiFi, Bluetooth, media center and GPS functions unites with a WiFi/Bluetooth/3G smartphone and Internet access that’s both broadband (WiFi at home) and narrowband (3G) in nature. Non-live programming goes broadband. Live programming — when needed, which is rarely — comes in via narrowband on demand.

10 years sounds like a short time. But in the technology world, it’s a near-eternity. Consider what Google looked like 12 years ago (1998):

All in all, you can count me as a skeptic on the “gone in 10 years” idea. But I’m delighted someone in a powerful leadership position is thinking big. To me, the real question is when will we cross the line at which point radio technology investments become a liability rather than an asset?

The Battle Royale of Network vs. Stations

Aside from the user-centric and technology issues are the financial and “power” issues. Be sure to read John Sutton’s post where he starts to look at this. Though Schiller talks about collaboration in the news production and distribution business that includes local stations, those notions remain largely ethereal. Setting aside the Argo Project — it’s both too tiny to demonstrate meaningful results and it’s being done with Bryant Park Project-style largesse that cannot be sustained — what work is NPR preparing to do to bring station leaders along when it comes to mission and revenue? Not much that I can see today.

Because the problem isn’t with NPR. They’ve got the digital talent. They’ve got the lion’s share of reporting capacity. They can aggregate advertisers and listeners at scale. Though they couldn’t stay the same size, they could make it on their own without the stations. The problem is with the stations.

Stations have gotten fat and happy buying NPR stuff (even at highway robbery rates) because the audience loves the content and enough of them give money. Plus advertisers like pubradio demographics. It’s working. TV is struggling to survive while radio is largely doing okay. But stations aren’t doing what Schiller appears to want: significant local reporting that would allow for news collaborations network-wide. For her notions of a news network to work, someone outside NPR has to be producing news content and sharing it. Too many stations have too little capacity (or none at all) in this area. And many stations funded by CPB are music-primary or heavily music-based, taking them further from public service news.

So we’re left with a hinted-at battle between the network and the stations over money, power and mission. Or rather, it’s a re-ignition of an old battle that started when the Internet burst onto the scene 10 years ago. Given that NPR’s Board is largely populated with station management, Schiller could be in for some interesting conversations in the months to come.

All this said, readers should note a portion of the Q&A session from her appearance at D8:

Is there a way to support NPR without supporting the local station?
Schiller: No, not really. The lifeblood of NPR is the local station. You’ll note we always route the membership drives through the local station. However, we do have a philanthropic support through the NPR Foundation, but that’s not for small individual donations.

But the listener can go directly to NPR in the Web model, and doesn’t need to go to the local affiliate. So what’s the local affiliate’s role in the new paradigm?
Schiller: The fact that so few journalists are covering state and local news is scary. We’re committed to providing that local coverage via the affiliates. “We’ve got to have that local coverage, and NPR can’t do it….To the extent that [local coverage] doesn’t suit your needs, then we have to work together to make it meet your needs.”

News Collaboration and Revenue Streams

While we’re on the subject of Schiller’s comments, be sure to check out this video clip in which she talks about collaborating on news content and on pubradio’s revenue streams:

http://s.wsj.net/media/swf/main.swf

Personally, I’m enamored of Schiller’s vision for the future, of a true news network in which the far-flung nodes are as active in the news process as the central, and to each his own strengths.

But I think that model, and the business operations required to make it go, look extremely different than what the system looks like today. So different that current station management will likely fight it with all their remaining power.

Because yes, the towers will go (too expensive), the middle management will go (too wasteful) and you’ll be left with journalist-bloggers focused on community news that operate local public service networks and both report and instigate reporting from others. Plus you’ll have some sales people and technical web people. In many communities it won’t look like public radio at all.

We just don’t know how fast all this will happen.

But in the shifting media environment about which so many of us write and ruminate, isn’t a hard-charging general needed at the top? Someone that has both the vision and the drive to push through to a new way of thinking and doing. The media environment changes in play today are not just operational in nature, where a COO might fix this, improve that — they’re strategic shifts. Seismic shifts. World-upside-down shifts. Only a CEO and her or his board of directors can handle those issues and realign the company. And given the time-to-market pressures of new media on old media, NPR probably didn’t (and doesn’t) have the time for all the required dinners and socials and private meetings, nor could it afford compromise after political compromise on the way to a new strategy.

NPR — like all media companies, for-profit or nonprofit, operating in any or all media formats — must grapple with the fundamental changes in progress. The relationship between producers, distributors and consumers is completely inverting.

Of course, this entire discussion could be moot. Public media’s future may have to be created outside the voluminous corpus of NPR (or APM or PRI or APT or PBS or …). Developing a new model with fundamentally different DNA may not be possible inside the system, either with a hard-charging general or a sweet-talking politician.

• Trouble for NPR — BuzzMachine / 7 Mar 2008 (Update: Note Dennis Haarsager’s comment to this post at Jarvis’ blog)

In that post he also refers to a great year-old post about public radio, following a meeting he had at NPR along with other new media folks. This is the post that introduces the great new word “converstation”:

• What should local radio be? — BuzzMachine / 19 Feb 2007

• Stern lost support in his tryout as No. 1 at NPR
  Current / 24 Mar 2008
• NPR Reboots — NewsGang Live 03.14.08 (MP3, 1 hour, 25 minutes)
  New NPR CEO Dennis Haarsager, Hearts of Space producer Stephen Hill, and Doc Searls
• NPR grapples with the prospect of a post-radio future
  Christian Science Monitor / 14 Mar 2008
• What’s the problem with NPR?
  The Sound of Young America (Jesse Thorn) / 13 Mar 2008
• Haarsager wades into murky water as interim chief at NPR
  Seattle Post-Intelligencer / 12 Mar 2008
• Why is managing NPR so damn difficult?
  Jeffrey Dvorkin / 9 Mar 2008
• Change at National Public Radio
  Technology360 (Dennis Haarsager) / 9 Mar 2008
• NPR is Radio Too
  Phil Wilson / 8 Mar 2008
• Value-added local journalism
  Etaoin Shrdlu (Howard Weaver) / 8 Mar 2008
• NPR CEO O-U-T
  On The Media / 7 Mar 2008
• WSU associate vice president’s retirement effective immediately
  Pullman-Moscow Daily News / 7 Mar 2008 (registration required, or read the full text in the comments below, thanks to Kerry Swanson)
• Trouble for NPR
  BuzzMachine (Jeff Jarvis) / 7 Mar 2008 (includes a comment from Dennis Haarsager and lots more interesting comments)
• Did new media success cost NPR boss his job?
  New Tech Heroes / 7 Mar 2008
• NPR Chief Executive Ousted After Fights With Board
  Chronicle of Philanthropy / 7 Mar 2008
• NPR – Horses for Courses
  Robert Paterson / 7 Mar 2008
• NPR – The Opportunity
  Robert Paterson / 7 Mar 2008
• How NPR’s CEO was Dumped
  David Weir / 7 Mar 2008
• NPR CEO Ken Stern Forced Out
  NPR.org / 7 Mar 2008
• NPR Leader Out After Board Clash
  Washington Post / 7 Mar 2008
• NPR Chief, in Office Since 2006, Will Depart
  New York Times / 7 Mar 2008
• NPR’s chief executive resigns
  Washington Business Journal / 7 Mar 2008
• Head of U.S. broadcaster NPR ousted
  CBC.ca / 7 Mar 2008
• NPR taps WSU administrator
  Seattle Post-Intelligencer / 7 Mar 2008
• NPR’s Chief Executive Steps Down
  Associated Press / 6 Mar 2008
• NPR CEO Ken Stern Resigns Abruptly; Differences Over Digital Media Part of It
  paidContent.com (Rafat Ali) / 6 Mar 2008
• CEO Ken Stern Leaving NPR
  NPR.org / 6 Mar 2008
• NPR chief resigns abruptly
  UPI / 6 Mar 2008
• CEO of National Public Radio out
  LA Observed / 6 Mar 2008 (includes text of NPR board memo, signed by Dennis Haarsager)

Older Articles (for context)

• NPR Chief Ken Stern Rides the Airwaves
  Wall Street Journal / 22 Oct 2007
• Ken Stern Named CEO, NPR
  fishbowlDC / 22 Sep 2006

Feel free to share more links in the comments.

I’m not sure if I’ll comment any further on the Ken Stern developments directly. Perhaps — it’s definitely disturbing to see this turn of events. But I’d rather wait to see what else comes out in the next day or so. NPR’s reporters have already lifted the veil further today than they did yesterday.

In any case, here’s the full comment left over at Paterson’s site…

Robert — I have some agreement and disagreement with your assessment here.

First is your notion of developing the “system” between NPR and the myriad public radio stations out there. I think that’s a losing proposition, long-haul. Pushing NPR alone toward any given mission is a huge task. Add in a few hundred geographically dispersed and distracted independent entities — each with different challenges and missions that in some ways directly compete with NPR at this time — and you have a royal mess on your hands. Talk about pushing a piece of string.

Stations and NPR will remain at odds so long as they have divergent visions of the future, and so long as any one of them doesn’t instinctively understand how to be successful in that future. Today, only parts of NPR understand the notions you talk about above, and only a handful of stations understand the future in a similar way. So the idea that we can all come together as a “system” is probably not realistic. I hate to say it, and I wish it weren’t true, but that’s the reality I see at the moment.

However, I really, REALLY like your idea of developing this new mission capacity in parallel to / outside of the existing system. There IS opportunity here for collaboration and positive “network effects” from the local to the national and back again. I get goosebumps thinking about the positive things we could do together for our communities and our nation if we worked collaboratively as you suggest — very exciting. It’s just unlikely to develop inside the orthodoxy, as you point out. Today, it appears that the orthodoxy is represented by a portion of the NPR board. They seem to have rewarded innovation with execution.

You also called out some of the new media / tech players out there in the private sector that could help us develop and build a new, parallel public service media and community fabric model. That’s great. I don’t know if those players would be willing to create Public Media 2.0, but I’d like to think so.

I suspect the development of a public service media model for the 21st century will start from two ends. First will be the large players with the money and the national scale to be successful online — ironically, players like NPR. Almost anything these biggest shops do can be successful due to scale. (NPR’s imprimatur can make almost any new media venture quickly successful.)

Then there will be the tiny players in communities across the country. Most likely these will not be the incumbent public broadcasters, who are too married to the old model to change — especially if they’ve been successful in the old model, and especially since the best leadership often goes to the biggest shops. Instead, we’ll see what was hinted at during the IMA conference this year… non-broadcast public service media groups that form on the web first, in small sizes, and grow organically with their “tribe” (as Seth Godin calls it). Over time these small groups can band together naturally using the web as a connective canvas.

The new, small players might be formed by the disaffected innovators from newspapers, local TV, public broadcasters and others — folks that want to serve the public interest first and feel that what we need now more than ever is real community, even if that means creating that community online.

I see tremendous (unparalleled!) potential, as you do. But with this latest NPR announcement, I’m drifting further into the Stephen Hill camp — if you love public media, get out of (traditional) public broadcasting.

I didn’t comment on the validity of the Times articles ideas themselves — we can debate that separately (and perhaps I will). But I did try to provide a reality check on those folks saying we should de-fund PBS because it would be fine on its own.

It continues to surprise me how few people understand how public broadcasting is funded. To be fair, the funding systems are a nasty mess of spaghetti, so I can understand the confusion. But it’s not really that hard once you’ve been through it once or twice.

Perhaps I need to write a post that diagrams and explains how this works. A diagram, however messy, might help. But for now, here are the salient points on how funding works in the U.S. public broadcasting world:

• The Corporation for Public Broadcasting (CPB) is an independent corporation setup by Congress to take in funding for public broadcasting services. They exist to foster pubcasting nationwide, in the “public interest.”
• The CPB is “forward funded” by 2 years from the present, mostly to help insulate the CPB from intra-year funding threats over political issues.
• The CPB has a politically-appointed (by the President) Board that oversees the company, but does not participate in day-to-day operations.
• The CPB gives out money to public radio and TV stations on an annual basis, generally in the fall and the spring, to serve their local constituencies. These are called Community Service Grants (CSGs).
• Local stations accept the CSGs, and then combine them with money raised from sponsorship (advertising lite) and membership (pledges, transactional sales) and anything else they can do to raise money. The size of their CSGs from the CPB are partially determined by their ability to raise money locally — the more you raise, the more CSG you’ll usually get.
• The local stations then build and buy programming to put on the air. To build programming they have paid staff and volunteers in varying ratios. When buying programming, they turn to national networks or independent producers. NPR and PBS are the two obvious examples, but there are actually many more.
• Separately, Congress funds other programs to support the technical infrastructure needed by local pubcasting stations (transmission gear). These might be earmarks in some cases, but mostly they are additional funds given either to the CPB or to other entities for distribution to local stations. These are one-time deals, but they are frequently repeated, depending upon needs. DTV conversion is an example of separate funding that helped most of the public TV stations make the leap.
• PBS and NPR may get small grants from the CPB for small projects or for general services, but in the grand scheme of things, the funding streams from the CPB are minor. They could live without these direct funds.
• Using the programming as an attractor, local stations then gather donations and sell sponsorships around the programming they broadcast.
• PBS, NPR and other programming providers mostly make money from the “dues” paid by member stations. Dues are mostly calculated based on the size of the target market served by the station.
• PBS turns around and spends their income on two main things: 1) their own technical infrastructure and the costs of distributing programming to member stations, and 2) buying the programming they run, from NOVA to Sesame Street to the News Hour and so on. Yes — PBS buys that programming, they don’t produce it. It’s typically produced by the largest stations in the network (e.g. WGBH, WNET, KQED, etc.), but also independent producers.
• And round and round we go.

Quite a mess, huh?

This is why the notion of defunding the CPB would have a lot of unpredictable impacts, allocated unevenly across the system (such as it is). The smallest stations would go out of business almost overnight. The largest non-producing stations would likely be fine after a few cuts here and there. Stations in between would suffer a mixed bag of impacts. The impacts to PBS and NPR are unclear because their customer base would shrink by some significant — but unknown — factor.

Here’s the main idea, though… Public broadcasting in this country is funded in complex ways, and it’s really a combination of:

• federal and sometimes state funding
• local sponsorship (advertising lite) sales to corporations
• local private donations (memberships)

This is why it’s often called a “public-private partnership.” It’s the proverbial three-legged stool at many stations. And we all know what happens when you remove one of the legs of that stool.

As to whether PBS is still “necessary” — that’s another discussion.