According to an in-depth 2011 study by Ernst & Young that examined how global media and entertainment leaders define digital revenue, the conclusion was:
“The multiple interchangeable terms used to describe digital revenue – new media, online, internet, electronic delivery or interactive – add to the complexity of clearly defining digital revenue. They lead to lack of clarity of individual business models and revenue streams.”
This study confirms the same struggle felt in public media. Without a standard definition, there are inconsistencies in judgment. As the Ernst and Young report notes, not only are there inconsistencies across all media organizations, public or commercial and large or small, there are inconsistencies inside organizations, between different departments within a single organization.
This issue was identified in the discovery process with Greater Public’s Digital Revenue Readiness Council earlier this year, as the group explored actionable guidance on digital revenue strategy. The challenge was noted in the council’s findings that were presented with the illustrated digital revenue roadmap at the PMDMC CEO symposium. Most council members’ organizations had their own definition of digital revenue but more importantly, they had a process in place at their organizations to assess it. That was the takeaway:
How each organization chose to define digital revenue was not a key indicator of success. The council believed that stations should define it however they want, but once they do, commit to growing that number.
While this conclusion mirrors the findings across other studies, the CEOs in attendance at the symposium asked for some level of guidance and an explanation as to what some of those definitions were. What are the different ways in which public media organizations define digital revenue and are there any conclusions we can draw immediately? The answer is yes.
Current practices fall into three trends...
When we look across public media it is important to highlight a significant point. Many, if not most organizations are not yet thinking about digital revenue in a significant way at all. Most are still developing a strategy to grow this illusive revenue stream as well as determining how they will count it. It is a chicken and egg conversation for many. How can we count something that we can’t define? For those who are thinking about it, however, some common practices emerge. They seem to fall into few broad categories.
TREND #1: Membership revenue obtained through digital initiatives is the primary focus.
Of the small number of stations that are actively tracking digital revenue, it seems that there is one immediate takeaway. No one seems to be counting all donations given through digital channels as digital revenue. The current practices are careful to note what initiated the action or “source of gift.”