Commercial Radio Stations Take Note: Emulate Public Radio’s Business Model

More anecdotal evidence comes in that, to survive in the current media market, multiple revenue streams are required — like six of them. Here’s a pubradio case study…

This lovely chart was crafted by plugging in 2009 revenue numbers from a well-known adult rock Public Radio Station.

If you believe in the premise of The Chaos Scenario — where the ever-expanding amount of advertising inventory outpaces demand (and sends rates down), it doesn’t take long to realize that we’re gonna need new revenue streams to make stations go.

The good news for Public Radio is that they’re way ahead of the game in terms of diversification, so commercial stations, take note.

The chart above shows that this pubstation, like most, pulls most (89%) of its revenue from the traditional big three — membership, underwriting, and grants. The PD noted that the underwriting numbers were down by about 8% due to the recession.

Thankfully for them, membership pulled up some slack, and they still had other cards to play.

Because this station invests in the creation of exclusive content, it was able to turn that content into 7% of its annual revenue by syndicating it to NPR Music, other radio stations, and yes, even HD radio. 7% is not a huge number, but in a down year it’s a difference maker. In an up year, it might even prove to be a higher percentage.

In addition to diversifying the revenue streams, it’s important to remember to diversify within the revenue stream. For example, in pubradio, many stations lean on non-profits, arts groups, and concert promoters for underwriting. Stations need to go beyond — start grabbing that beer money.