A New Revenue Model for Radio

When radio was coming into existence, the early owners of radio stations were manufacturers of radios. (I’m really simplifying things here, but bear with me.) They knew if they didn’t broadcast radio programs that people desired to hear, they wouldn’t sell many radios. They didn’t look at those early radio stations to make money as much as they looked to them to sell radio sets.

AT&T didn’t make radios. AT&T provided phone service and phone lines. AT&T to better understand this new thing called radio put a radio station on the air. Not wishing to have it cost them money, they figured they needed to come up with a way to make their station self-supporting. The best model at that time was the one used by newspapers and magazines; the selling of advertising. So AT&T sold the first radio commercial on their station; WEAF.

As more people and businesses went into the radio business, the selling of advertising became the model for making money. It’s been that way for nearly 100 years. But that was before the great disruptor; the Internet.

Every ad supported medium is faced with the same crisis; how to support itself when advertising isn’t getting the job done.

Rachel White is working on this problem for The Guardian. This newspaper began in the United Kingdom and today has become the most-read serious English-language media outlet in the world thanks to the Internet.

Rachel is The Guardian’s new global director of philanthropic and strategic partnerships. She’s charged with replacing the traditional ad-supported business model with fundraising. (Sounds like how NPR and PBS operate, doesn’t it.)

In a world where advertising has become increasingly fragmented, the challenge for news organizations is to maintain editorial integrity without selling out to the demands of advertisers.

Much like colleges and universities seek endowments from their well-off graduates or others who share in the vision of the institution, Rachel White is part of an innovative philanthropic model for sustaining an independent media platform.

Rachel is tasked with the mission to create major relationships with organizations such as the Gates and Rockefeller Foundations.

The Guardian isn’t doing away with advertising. It will continue to sell advertising to those organizations that wish to be associated with a journalism enterprise that takes a strong and independent stance. It’s just making sure it is never put in a position where advertisers can bias editorial decisions.

“If you think about the future of media, how do you fund media in the long term?” White was reported as asking. “Media underpins democracy. So how can philanthropy underpin that democratic model?”

Which got me to thinking….if radio’s business model came from print and print is now exploring philanthropy, might this not be an idea for local radio too?

5 Comments

Filed under Education, Mentor, Radio, Sales

5 responses to “A New Revenue Model for Radio

  1. Why not? Bob Bittner’s three AM stations are entirely listener-supported. Another friend’s daytimer receives a significant amount from contributors, and the rest from ads. Many contributors are outside the market listening online. But in both cases, the appeals are based on need to fund operating costs rather than to increase profits. One station I know of that tried both income streams but made a profit found that listeners questioned the airing of commercials if they (the listeners) were sending contributions.

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  2. What is not clearly stated that the The Guardian is a non-profit organization to begin with. It has been so for almost a century. It was a rare bird then, and is still unusual now.

    It is not philanthropy to “donate” to a for-profit media organization no matter how you value the service they provide.

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    • According to the Guardian News & Media’s David Pemsel: The Guardian isn’t a nonprofit. (Legally, it’s a for-profit, with a single shareholder: the Scott Trust Limited, which is legally charged to reinvest profits to “sustain journalism that is free from commercial or political interference.”)

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    • I suspect if a consumer believes supporting a commercially marginal entity will help sustain its availability they don’t much care whether it’s structured as a non-profit, or whether or not their support qualifies as philanthropy. Although only domestic 501(c)(3) status makes the support tax-deductible, that may not be what drives the decision.

      Liked by 1 person

  3. spotmagicsolis

    donation model “radio” start-up: Radical.fm

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