Friday, June 5, 2015

PRX HAS CHANGED THE MODEL FOR NONCOM SYNDICATION



Earlier this week New York Public Radio – WNYC – announced that two of its national programs are leaving NPR distribution. According to WNYC sources, Radiolab and On the Media will “self distribute” as of October 1, 2015. People are speculating that the programs are moving to PRX.  This makes sense to me.

PRX had no comment.

[DISCLOSURE: My company, Ken Mills Agency, LLC, represents American Routes, which is distributed by PRX. In the past I have been a paid consultant for PRX.]

HOW THE PUBLIC RADIO NETWORKS MAKE MONEY

Pubic radio has three networks: NPR, American Public Media (“APM”) and Public Radio International (“PRI”).

Member stations own and govern NPR. Stations pay lots of money for membership and even more for programs like Morning Edition and ATC.  NPR also distributes programs owned by others including Car Talk, Wait, Wait and Latino USA. Typically stations must be members in order to access/buy programming from NPR.

APM and PRI use the Country Club Model.  Stations must pay a fee to become affiliates.  Affiliation fees are determined by the size of the market and Total Station Revenue (“TSR”), as reported to CPB.  The fee is a cover charge that gives stations access to the network’s programming.  After becoming affiliates, stations pay carriage fees for the programs they carry. With a handful of exceptions, only affiliates can air APM and PRI programs.

This business model has worked very, very well for APM and PRI.  Both networks use the revenue from affiliation fees to pay for their daily operations.  APM and PRI also receive a portion of carriage fees paid by stations. This percentage comes out of producer’s pocket and can vary from 10% to 40% depending on the program.

STATIONS DISLIKE THE NETWORK “TAX” ON PROGRAMMING

Over the years I have heard from station folks complaining that APM and PRI affiliation fees offer no benefit to stations.  The perception is that affiliation fees are used to pay comfy salaries to network executives etc. But, the stations keep paying the fees because it is the only way they can get programs that are valued by listeners.

The networks do offer advantages to stations and producers: 

Stations like one stop shopping and quick access to support services from the networks.  Though they say they don’t do it, all three networks sometimes bundle programs to save the stations some money.

Producers like the convenience the networks provide. The networks bill and collect carriage fees, market programs and often help with Content Depot expenses.  Some producers feel there is value to being associated with a network.  But, the network halo doesn’t seem to be as bright anymore.

ENTER PRX

PRX became a for-real national program distributor in the late 2000s. Now they distribute This American Life, The Moth, Reveal, Sound Opinions, American Routes [my client] and many, many more.  They sponsor a number of creative initiatives.  Unlike NPR, APM and PRI, PRX can make quick decisions and react to market trends as they happen.

Stations like PRX because it is cheap and easy – almost any noncommercial station can join and participate.  PRX’s SubAuto system – the method of delivering programming to stations – works well according to users.

Producers like PRX because SubAuto provides optional automated carriage fee billing and payment. PRX now provides marketing services for certain programs.  PRX doesn’t intrude into producers editorial and creative process. 

Perhaps the most important reason stations and producers like PRX is the LACK OF NETWORK POLITICS.  PRX plays well with everyone.  The only people who seem to dislike PRX are at organizations that compete with PRX.

THIS AMERICAN LIFE SHOWS ONE OF PRX’s BIGGEST ADVANTAGES

MORE MONEY GOES TO THE PRODUCERS.  PRX typically retains a much smaller percentage of the carriage fees paid by stations. Here is a hypothetical and illustrative scenario that is solely my creation and is NOT based on info from PRX:

Lets say a certain program brings in $2,000,000 of station carriage fees.   Say the network takes 25% of the revenue and pays the remainder to the producer.  The network pockets $500,000.

The program’s producer moves distribution to PRX. Hypothetically, PRX takes only 10% of the fee revenue: $200,000. $300,000 moves immediately to the producer’s bottom line.  Sweet deal.

Plus, the programming is available to more stations.  PRX’s inexpensive affiliation fee means a larger universe of stations.

Will Radiolab and On the Media move to PRX? They might but even if they don’t the new distribution template will be The PRX Model.


2 comments:

  1. Two things:

    First, remember that by moving to PRX, a show is offloading a lot of the cost of maintaining a highly reliable content path from the show to the station...in the form of an enterprise-grade internet connection. Many pubradio stations are on college campuses and already have enterprise-grade internet, but not all. And those that need to provide it themselves (usually via fiber) often find it can be incredibly expensive; usually around $1000 to $2000/month.

    Second, shows have self-distributed on PRSS for many years. For the one- or two-hour once-a-week shows non-live/file-delivery shows, it's quite economical for all parties involved.

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  2. Hi Ken, I'll reply to your concern about implying that PRX is not reliable on this post since this is where I originally commented...

    It's not so much that PRX is unreliable, it's that THE INTERNET is not reliable. Or more precisely, it's real reliable right up until it's not. Most non-enterprise means of internet connections...which includes all "business class" systems like cablemodems, DSL, and FiOS-like fiber...are hideously unreliable in the face of any severe weather. Read the TOS and you'll quickly find that the ISP provides very little in the way of guarantees in terms of uptime, nor in terms of restoration of service in an outage. Many cablemodems require power to operate; not just at the service point, but also along all the poles between the service point and the head-end. Lose power in the region and you're dead in the water.

    Satellite, of course, also needs power...but only at the service point. And yes, satellite is not bulletproof - but the cost of downtime with satellite is so severe that various systems/procedures are in place to provide five-nines of reliability (or a lot closer to it than anything internet will ever provide).

    That said, it IS true that PRX is less reliable than PRSS. That's not meant to be an insult, it just is what it is. PRSS offers 24/7/365 phone/email support. PRX does not. PRSS has an entirely redundant facility with geographic diversity (APM in St Paul) plus a largely redundant facility in NPR West. PRX does not. (well, I think they have backup servers but they do not have redundant office/support facilities.) PRSS is just a lot BIGGER. Bigger is not always better, but there are some advantages that being above a certain size conveys...advantages that can't be duplicated if you'r smaller.

    Finally, and I concede this is sort-of a moot point: using PRX, by definition, requires exposing your automation system to the public internet. Even if your "sneakernet" things (http://en.wikipedia.org/wiki/Sneakernet) it still means you have to make sure your automation system has security & protection just like any internet-enabled computer.

    There are still some stations out there that have intentionally isolated their automation computers from the internet. And PRSS lets them do that with a minimum of fuss.

    Admittedly, the reasons for isolating automation are getting less relevant every day. But it still could represent a major change for any station that still operates that way.

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