Public Radio Online presentation, 2004

PUBLIC RADIO ONLINE

SUBSCRIPTION and PAID ACCESS WEB SERVICESSUBSCRIPTION and PAID ACCESS WEB SERVICESWhy Public Radio needs them : How they workWhy Public Radio needs them : How they work

S T E P H E N H I L L

Subscription Services forPublic Radio

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the Network Era : a sea change for broadcasters

radio broadcasting webcasting

point to multipoint multipoint to multipoint

channel scarcity channel abundance

few formatted services diverse & multi-channel services

formatted or scheduled service on-demand service

low option value high option value

local (regional networks) local, regional plus national,international (for unique sources)

homogeneous audience multiple heterogeneous audiences

zero marginal cost peradditional user

approx. linear incremental cost peradditional user

analog, audio only digital 'metamedia' environment


3

"disruptive technology" paradigm

new medium less appealing at first, gets better

rapid rise to dominance after it meets needs of mainstream audience

hardware in place; broadband booming; wireless networks coming soon

digital distribution near tipping point

already digital, vs. analog radio

HD digital radio will be too little, too late


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coming soon: integrated portable devices

cell phone

WI-FI data receiver

AM/FM/Satellite? radio

PDA features

media player with massive storage

desktop integration for automatic transfer and backup; facilitates use of downloads

gets media from online service providers

works everywhere


5

new competition will cause audience fragmentation

same as public TV when cable became pervasive

already happening due to format focusing,but hidden by core growth; will accelerate

future listeners will be less loyal -- they will have many more choices!

voluntary subscriptions less appealing when competing with bundled services and special interest suppliers

doom and gloom scenario:competition and fragmentation lead to downward spiral -- declining revenue, worsening service, fewer choices


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what Internet program delivery can mean for public radio

expand historic service model with additional programming

deepen service to core audience with on-demand content

support niche audiences without compromise

offer programming by subject, genre, type, or audience

end technical limitations on program capacity

end daypart limitations

logical destiny of the discrete program aggregation model


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web delivery pros

allows unlimited channels time-shifted, alternative, archival content

allows on-demand use still underestimated! a true paradigm shift for

listeners

"metamedia" platform : audio plus text and graphics

delivers additional information easily

serves niche audiences as well as core no need to choose, alienate specialty listeners

"locks in" the subscription model builds ongoing provider -> audience relationship


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public radio advantages

historical 50 years of experience with subscriber model

50 years of aggregating quality programming

50 years of delivering small audience content

functional ability to promote web services on-air

ability to cross promote all services to community

ability to mix local & regional with national & international

content

multiple income streams : non-commercial status allows public

and institutional funding as well as direct subscriber support

non-commerical status qualifies for royalty concessions

on use of copyrighted media


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public radio weaknesses

underfunded even for 'normal' operation limited, insufficient development capital

generally small or overloaded staffs little or no headroom to support intensive web

production

lack of technical expertise in online development will require use of 3rd party services to start

culture of quiet acceptance, middle-aged torpor little incentive for an entrepreneurial culture


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Q: 'free' or subscription? A: both.

give away primary air stream online to increase access

give away any on-demand programming that can be funded by normal membership revenues or external underwriting

use expanded content and on-demand access to drive a premium class of membership for bundled content

CPB fears re system defunding? Highly unlikely. Current services remain; additional 'free' services can be offered online as well. Only premium content delivery services

that expand the system's mission are charged for.


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'Public Radio Online' : core models

Marketing Model : deep service and expanded choice on-demand access alternate formats access to archives

Distribution Model : web syndication same as satellite for broadcast syndication,

but targeting station web sites multi-channel medium means virtually unlimited inventory,

so program direction (though possible) is less critical

Business Model : tiers of service free service over the air additional free services on station websites expanded service by subscription


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3 tier program delivery service

Tier One : free on-air service. formatted News/Information or music services to local

communities. Revenue comes from voluntary memberships, public and foundation grants and institutional support.

Tier Two : additional free online services. a stream of the station's air service, PLUS other free streams

and on-demand programming underwritten by public or private funding sources. Revenue comes from online fundraising.

Tier Three : "Public Radio Online" -- premium bundled programming package

revenue comes from subscriptions or prepaid access in depth archives of all the major syndicated programs multiple side streams or alternate music channels on-demand programming from across the system


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“The Bundle”: a premium service packagemust create an overwhelming listener value proposition

components time-shiftable versions of core daily programming alternate channels or 'side streams' niche audience services : Latino, Asian, Native, local ethnic, etc. on-demand Archives of blue-chip PR content. Example:

INTERVIEWS : Fresh Air, ATC, ME, Living On Earth, etc. MEDIA REVIEWS : Fresh Air, ATC, local shows STORIES : This American Life FEATURES : ATC/ME, Living On Earth, others MONOLOGUES : Keillor, Codreascu, Joe Frank, others SPEECHES : Alternative Radio, Commonwealth Club, Press Club MUSIC CHANNELS and ARCHIVES:

The Thistle & Shamrock — Celtic Afropop — World World Café — AAA Hearts of Space — contemplative/world Echoes, KCRW — eclectic


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key issues in monetizing the audience-broadcaster relationship

who controls the user relationship? station = the primary point of contact for listener content provider = the producer or program source service provider = the online program aggregator

which way does the money flow? from station to content provider

same as conventional syndication, but metered from station to service provider

major syndicators like NPR, PRI , MPR, BBC Public Interactive, PRX, independent syndicators

from content provider to station commission models (new)- station gets paid for program

usage from service provider to station

'bundled' commission models - station gets paid for bundle usage


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1st generation payment model —flat rate/unlimited subscription systems

created by the adult industry for web services

components web hosting stream hosting transaction processing (VeriSign, iBill, Paycom, etc.)

supplies online customer interface and phone support supports recurring monthly & quarterly billing


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tracking usage key enabler of 2nd generation systems

PROS enables flexible service plans (measured by the minute) facilitates royalty reporting used to calculate cost of measured syndication services

(flat-rate/unlimited services still require tracking and accounting)

adds security, prevents fraud

CONS privacy issues when linked to personal accounts tracking and data usage policies need very careful

consideration complicates user experience if not done properly


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flat rate vs. incremental usage plans

conventional wisdom : flat rate preferred overincremental usage plans by consumers

true, but art is in the configuration of the offer

maximum usage paradox : even if you offer flat-rate/unlimited service, people use only what fits their schedule

service pricing can be determined by average use

if you cap usage intelligently, it will not deter subcriptions limits need to be set high enough so it 'feels unlimited'

tracking controls the heaviest users tames "bandwidth-sucking vampires" can still offer unlimited service for a premium price


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tracked/measured subscription systems

enable more sophisticated user service plans limited use plans (1000 minutes/month, rollover minutes etc.) pay per listen (with drawdown credit account) prepaid minutes (one-time use, gifts, promotions) subscription (recurring monthly or quarterly charges)

enable web-only syndication ! tracks usage, allows syndicators to charge for actual traffic allows distribution of income across multiple syndicators tracks usage, allows syndictors to pay commissions to station

components : web hosting : everything appears on the station site stream hosting : CDNs necessary for subscription services transaction processing : credit cards, online accounts, etc. authentication/authorization/reporting/customer support


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authenticate, authorize, track, report

authenticate maintain user account database verify user is who they say they are pass user data to transaction service provider as required

authorize recalls user privileges, enables access to media manages user "session," pops up messages if needed

track record user choices measure stream usage send to tracking database

report web accessible interface for data access by stations &

syndicators used for royalty calculation by syndicator and/or station supports precision research

customer support account help, tech support


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subscription service network diagram

flow diagram for user relationship with content provider or syndicator;

(diagram for user relationship with station would vary slightly)

streaming server

station website

transaction gateway

online reports

tracking plug-in

authentication network

subscriber

credit card company

content provideror syndicator

merchant bank

provides web interface

electronic transfer

"register" content

auth orize

authenticate

authentication and clearing

tracking data

station's

bank

$commissions

Verisign, iBill, Paycom, PayPalMindPort, etc.

$

$


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Entriq media authorization networkThis is the vendor Hearts of Space is working with to build these functions.Microsoft will offer this functionality eventually in the Windows Media platform.


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Entriq network feature set


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conclusions and prognosis

system has 3-4 years to act before it is hit by a 'perfect storm' of competition from other online program services targeting desktop listeners and improved portable devices

public radio is extremely well-positioned to offer competitive subscription and prepaid access services

system must resolve the philosophical issue of charging for premium services and test pricing plans and thresholds

creation of bundled subscription services will require industry-wide cooperation and CPB support

rights and reporting issues will clarify soon and will not be a big problem going forward, especially for subscription services