Public Radio Stations Take Cut of CD Sales
DRUMMING UP REVENUE
PUBLIC radio stations from Boston to Los Angeles are frequently broadcasting a new message during music programs that goes something like this: ``If you want to add Karl Haas's `The Romantic Piano' or any other recording to your music library, call the Public Radio Music Source.''
Launched in January, the Public Radio Music Source (PRMS), a nonprofit organization in St. Paul, Minn., offers listeners a new way to order music they hear on the radio; and it gives public radio stations additional funding. PRMS was developed in response to a federal mandate requiring public broadcasting to find alternative sources of revenue. It was initiated by the Station Resource Group, a coalition of public radio stations organized almost a decade ago to assess the future of public radio.
Through a toll-free number broadcast on-air, listeners can order any recording on compact disc from a station's playlist, says Alison Circle, marketing manager for PRMS. In return, public radio stations earn 10 percent of the proceeds.
PRMS provides stations with a quarterly list of the names, addresses, and phone numbers of listeners who purchase recordings through the organization, Ms. Circle says. The stations in turn use these lists for telemarketing purposes. So far, about 170 stations participate in the program, she says.
KUSC/Los Angeles was one of the first public radio stations to test PRMS. ``I don't know of anything that we have ever done that has had as an immediate appeal to listeners as this service,'' says Wally Smith, president and general manager of KUSC.
The terms are simple, Mr. Smith says. A station does not pay for the service; it only agrees to promote it. KUSC/Los Angeles expects to earn about $60,000 to $75,000 annually, he says. So far the station has made about $30,000. Even more important than royalty and sales, Smith says, is that the station provides a service to listeners that ``makes them feel good about us.''
PRMS has given a contract to Select Music Systems in St. Paul, Minn., to answer the phones, take the orders, and ship the products to the customers. With more than 120,000 titles in stock, sales have taken off since January, Circle says. On average, PRMS receives 600 to 700 orders a day.
`WE are tapping into the future of retail,'' she adds, by offering consumers a more convenient way to purchase classical music that is not easily accessible.
Radio stations send their playlists by computer or fax to Select Music Systems, typically the morning of the broadcast. Select Music Systems can track a request without knowing the title of the recording, Circle says. Listeners only have to know the time the song aired. ``It's a real boon to the non-mainstream recording industry,'' she says.
Tony Quin, vice president and chief operating officer of Select Music Systems, introduced a similar service called Music Link for commercial radio stations. Music Link gives stations a 5 percent royalty on all music sold.
Mr. Quin, who came up with the idea for Music Link six years ago, says it was slow getting started. He compares it with trying to introduce the microwave oven. ``At first no one believed you could cook without heat,'' he says. ``Now everyone has one.'' About 100 commercial stations now use the service, he says, with more contracts under negotiation.
Quin downplays the amount of money radio stations could earn from PRMS and Music Link. ``The royalty side is less important to stations,'' he says. Although he will not say how much money he expects Select Music Systems to earn from sales in 1993, he does say $1 million is an ``underestimate.''
Buying music today either means going to a record store or joining a music club, Quin says. Music Link provides an alternative to the consumer who is tired of shopping and short on time. PRMS and Music Link also target an older audience (25 and up) that is more likely to want convenience.
About 20 percent of Music Link customers are repeats - a high percentage for a new business, Quin says.