NOW can we talk about business?

The title is a riff on a Hillary Clinton's famous remark about health care. Like reforming our medical delivery system, the effort to reform public broadcasting's content delivery systems is fraught with big issues, entrenched stakeholders, and lack of action.

I have a bit of history about the business question. Within public radio circles I pass for an entrepreneur because I have co-created several businesses to augment our barely break-even income from syndication of our national program. And ever since I started thinking about the impact of the Internet on niche radio formats, stations, programs and producers, it's been clear to me that it was ultimately going to change the way we did business — with each other and with the community.

Since the demise of the PRC, the once a year omnibus Public Radio Conference, the Integrated Media Association (IMA) conference has emerged as the best place to discuss these issues. At the 2006 conference in Seattle I was on a panel and was surprised to find the moderator steering the discussion away from what I considered the burning questions. At the time, I described the avoidance of the business discussion as a "third rail" that everybody seemed afraid to touch. I even recalled Camus' remark that "there is only one truly serious philosophical question and that is suicide." To my mind, there was only one truly serious issue on the table and that was related to business models and business relationships within the system. Everything else was details. True to form, the discussion was tabled. Now another year has passed, and as far as I know, it's still not being seriously considered. Man, that third rail must be really scary.

Recently I raised the question again in email with two of my colleagues from the Public Service Publisher (PSP) group, Dennis Haarsager of Northwest Public Radio, and Tim Olson of KQED in San Francisco. Here's an edited version of that discussion, which started with Dennis bringing the group up to date on the developments announced at the CES show involving Open Media Network (OMN), the Kontiki peer-to-peer distribution technology, and VeriSign, which bought Kontiki last year. Since nobody is more aware of new technologies that affect broadcasting AND has more goodwill and contacts within the existing system, I asked Dennis for more:

STEPHEN HILL: Thanks for the update, Dennis. Indeed, exciting stuff. Makes you wonder (in the light of Rob Paterson's recent post about HBO) if anybody in public broadcasting besides you, Rob and a handful of others are paying any real attention.

In that regard may I ask for further updates?

1.   What's happening with the DDC (Digital Distribution Consortium) project and all the high-level backroom activity aiming to build a new distribution architecture? I haven't heard a thing about it since a meeting in San Francisco I attended last summer.

2.   When will there be any real, substantive discussion of the the business changes that are needed to support all of this pie-in-the-Internet-sky visioning? I'm referring (as I'm wont to do) to revenue sharing, subscription and syndication models.

3.   Any chance of these issues being raised at the IMA?

DENNIS HAARSAGER: My understanding is that Tim's group [ed: the DDC] did have such discussions that that the group felt optimistic about what their analysis showed.  Ditto the work that Mike H. commissioned on the video side.  But there hasn't been a larger discussion of which I'm aware.  There's a Thursday session at IMA called "Hybrid Business Models" with Doug Kaye, but it would appear that's the closest IMA gets to it.  The Thursday dinners look to be for various BoF sessions, so maybe we could start one on the subject - though of course that's not necessarily the "real, substantive discussion" you correctly are calling out.

TIM OLSEN:  There isn't a DDC presentation at iMA that I'm aware of.  There may have been thing moving without my knowledge, but a couple notes.. Business plan is written, for radio side at least seems to come down to a few key items.

- will NPR be the "DDC ASP" or other?
- NPR is moving ahead with phase II of podcasting, including producer sales availability
- MPR is rumored to be putting in many more podcasts into NPR podcasting, which signals potential ground for more MPR/NPR deals.  In my opinion, MPR and NPR deal is the make or break it one.  Others would follow if those two worked it out.
- If folks want someone besides NPR to be the DDC, then there needs to be a push for that.  The trouble is PRX, and PI, the two that could push for such, are busy with their "day jobs".

I'd be interested in pushing the discussion again.  Just been busy.

STEPHEN:  Here's what worries me in a nutshell: the DDC is only half the battle, and the easier half at that. MPR, PI, and PRI may quite rationally have decided that building, staffing and operating an IP distribution infrastructure is beyond their job classifications. If so fine; anything that gets these organizations to cooperate on building the machinery needed to support future services is progress, and I will be the first to applaud them for it.

However...without confronting the larger issue of the business relationship(s) between producers, production organizations, stations, networks and the national portals to public service content — I just don't see the DDC effort delivering the kind of comprehensive changes that will be needed to secure (let alone improve) the overall status of public broadcasting in the new mediascape. This kind of thinking, I believe, is exactly what Rob Paterson was trying to engender in his work with the system leaders in the New Realities workshops.

It's not that whatever they build won't get used by stations — I'm sure it will, to one degree or another. The problem is not in the back-end machinery, but in the public-facing side of things. What's the equivalent of HBO On Demand for public service content? Is it something different for every station? Or something that has a core repertoire of programming that's shared by the entire system, and is the very thing that differentiates it from a growing list of other public service programming providers? Or is is going to be happening on other portals and services?

The advantage of doing something comprehensive and highly publicized comes down to position in the new mediascape and the money from underwriting, grants and membership dollars that relates directly to that position. I just hate to see such a golden opportunity to improve the overall status of public broadcasting go by while we're talking about next generation deck chairs — sorry, distribution infrastructure.

It's overdue to be talking about service offerings: how to configure them, promote them, monetize them, and do the revenue-sharing and syndication deals of the future. It's frustrating to see a great opportunity wasted on even the best-intentioned but insufficient efforts.

TIM: so you are arguing for a aggregated portal page of all public media content, with all the bells and whistles (promotion, community rating/ranking, independent presenatations,  and for business ads, paid subscriptions... etc)?

NPR is making a play for this on music with NPRMusic.org.

You would advocate the same for news?

STEPHEN:  The PSP group discussed all the different possibilities for how a broader on-demand content offering might work. If you recall, there was no single model that emerged from those visionings as being clearly better.

Mark Fuerst seemed to prefer a central portal and argued for doing it, either at NPR.org or a newly created site; my original 'pitch' was for a distributed system (closer to what DDC seems to be talking about being the back end for) where the individual stations could easily add web content and services to their sites and use their broadcast signals as way to promote their web offerings for their own benefit as well as the brand and identity of the whole system.

And it seemed clear that there would a significant number of new aggregation points in the future at the other major Internet portals and services (like OMN) where public broadcasting content would be offered. In the end, the PSP group took a "both/and" position as far as how the system would be configured: both at station sites and portals. That's where it was left before the DDC effort.

One of the problems in dealing with a federated system like public broadcasting is that even if you could design a perfect solution, you could never get the states/stations to agree to implement it universally -- at least under normal circumstances. Only a major external threat or a clearly declining trend in market share and revenue might have the power to change that, but I wouldn't put money on how it would play out. Worst case -- the "death spiral" scenario of declining market share, advertising, and product quality now facing the newspaper industry would happen even more slowly and excruciatingly in public broadcasting.

My real 'pitch' is that there is a substantial amount of accumulated goodwill, both in brand and business terms, now shared by individual stations, programs, and the public radio system as a whole. (Public Television is another story.) There is an opportunity to build on this goodwill, combine it with a much more extensive and flexible service offering, and create a new national membership level for public radio that complements and enhances local memberships. Think of it as a paid upgrade. Public broadcasting is ideally positioned to do this because its users already are invested in its mission as well as its current service.

The question for the networks is how to aggregate a competitive digital service offering; the question for the stations is how to be part of an up-to-date public media service, whether delivered via station sites, portals, wireless b/b, preloaded iPlayers or brain implants.

The business discussion I'm pushing for is the one that would be required to support all of that -- defining classes and levels of membership, what the associated content offering(s) would be, how the system handles national and local underwriting and ancillary revenue streams -- and then the really contentious bit: how the manage the revenue splits, shares, commissions and royalties and fees to incentivise all the participants.

If NPR is doing some part of this for NPRMusic.org, it's a good example of continuing to focus on narrow opportunities, rather than imagining and implementing a broad, comprehensive solution.

The thing that bothers me most is what Paul Marzalek said in his blog a year ago: there will only be one chance to pull off anything like this and then the opportunity will be lost forever, and the system and its component entities will pay the price for years to come.

Something like what I'm talking about will be created, because it's simply the most user-friendly and efficient way to deliver a broad array of digital services. OMN should be enough evidence. At least they are a friendly potential competitor — so far. The question is whether public radio will take the opportunity and use it to better its position and secure its financial future, or whether it is content to be just another syndicator, pushing its programming to other aggregators for a royalty and/or scratching for donations. That scenario would not be a disaster, but it would be sad loss of position and potential.

OK, I'm stirring the pot here. I'd just like to know if there is any desire to seize this opportunity, have a constructive discussion, and do something about it. If not, fine. I'll gladly give this a rest and tend my own garden.

Comments are open, please post or write on your own blog and link back.

:: SH