How to help cover costs - Broadcasting World

How to help cover costs
By James on June 09, 2009

Background
Working as part of the team at LoudCity for the past year or so, I've learned that there are generally two main reasons that stations don't make it. Lack of listeners, which I tried to address in another sticky at the top of this forum, and lack of funds.

I'll state up front that it's not my goal to profit from my station, which turns 2 years old this week. I started it as a hobby, and it'll stay that way for the forseeable future. I do it all for fun. But I still need it to generate some revenue. Significant revenue, in fact. So I'll kick off this thread by telling my story, and how I survived the past year. There are many ways to raise money, but I'm going to discuss what I do to raise money - I ask for donations.

In January of 2006, my tiny station was lucky enough to be selected for inclusion in a major media player directory. The result was a lot more listeners, and hosting expenses (are you ready for this...) of anywhere from $1100 to $1400 a month. That's not a typo. My operating costs last year for the Atlantic Sound Factory were over $12,000. And you think you have problems...lol

When the peak listener count on my station went from 35 to 800 in 24 hours (reaching an average of 1700 daily in the months ahead) I needed a plan and I needed one fast. I was fortunate to have made friends with other webcasters and several of them offered me advice. One or two even phoned me. It was very helpful, and after weighing the options, I decided to try and cover these unexpected and enormous expenses through donations.

My donation program has been a huge success. It had to be, or I was in big financial trouble and my station would not have survived. At the time, I didn't think about it much - just went on-air and asked listeners for help. But now, a year down the road, I can look back and see clearly what works, and what doesn't. I'll share that experience in the hope that maybe some of it will help other webcasters cover some of the costs of operating. Remember, hobbies cost money. If you break even, you've had an excellent month.

Factors to consider
I have learned so much as a result of running my own station that I could literally write a book. Maybe one day I will. But today, let's look at factors that influence donations regardless of whether your daytime peak is 20, 200 or 2000.

1) Your target audience. I am convinced that one of the reasons I am able to raise money to help offset expenses each month is that my audience is mature. I didn't change my format - doing that would be selling out, because the whole point of my station was to share my music with others, not play the most popular format in hopes of being number one. Run by a 41 year old Englishman living in the USA, my station appeals to people around my own age. People in their 30s, 40s and 50s... people with jobs, careers, and money. Like I said, I didn't plan that - it just worked out that way. But I'll bet I wouldn't be nearly as successful raising money if my format appealed to teenagers with no job, and better things to spend money on than online entertainment. So if your target audience is of an age where they are established and employed, and they listen at work, that's a really good thing.

2) Your format. Do you offer listeners a good variety of music? Something unique? Like I mentioned in my other article regarding getting listeners and keeping them, can you stand listening to your own station 40 hours a week? To get people to donate, you need long-term listeners. Not people who tune in for 10 minutes and tune out again. There will always be "churn", but you need at least some people who will tune in for 5, 6 or 7 hours a day on weekdays... every day. These listeners become fans. You need them. Otherwise, you're not offering anything of significant value - which will make asking people to support it very difficult.

3) Your platform. Trust me - cutting corners on cheap hosting will bite you in the *ss in the end. Do homework on hosting... don't buy capacity from hosts who do not run servers on true, dedicated bandwidth. 99.99% uptime and zero buffering is essential to listener retention. It's hard enough convincing people to donate, without trying to do so on a stream that's experiencing outages and buffering. I learned that lesson the hard way. I used to host in cheap data centers with shared bandwidth. I got badly burned.

4) Your image. Imaging for your station is very important. Imaging needs to be professional enough to make it sound like you're established and know what you're doing... great-sounding sweepers running no more than 3-4 times per hour. More often than that and you sound insecure. Less often, and people will not remember your station or differentiate it from others. I run a sweeper once every 20 minutes on weekdays and I think that's plenty. Imaging, along with the steady no-buffering stream in item 3 above, inspires confidence in your listeners that you are competent and your station isn't going to vanish tomorrow. Be sure your web address is mentioned in your sweepers.

5) Your personality. If I said everything else was important, this is critical. People donate to you, not some 24/7 automated jukebox. They can get that for free from AOL, Yahoo and just about anywhere else. Don't forget that. So... do you have to be a slick, polished radio personality? Evidently not, because I have no training as a DJ. I'm a software programmer, for goodness sake. I suck at being a DJ. But I speak to my listeners anyway. Not often - maybe once an hour, mostly to introduce the next song. I'm on for maybe 20 seconds each time. But 2-3 times a week, I'll talk for a 3-4 minutes on my lunch hour about the news of the week, or what's going on in my life. Heck, I even tell them when I'm not feeling well. It's not a tactic - it's who I am, but the result is that my station now has a "little guy" feel to it. The sweepers say "professional" and my own commentary says "underdog". People support me, not my station. It's not a corporate owned station, and I swear it's partly my lack of polished on-air talent that gives the station it's charm. If there's no "me", there's nothing to empathize with. And no donations. I'm lucky to work from home most days, so I can be "live" but that's not a requirement. You can easily pre-record some commentaries on a Sunday afternoon and queue them up for play during the week. It's so important for people to hear you - the person behind the station - talk about things in general without mentioning the need for money that without this kind of break in the music, any donation campaign you set up will not work well.

6) Your responsiveness. Never let a feedback email or suggestion from a listener go unanswered. Ever.

7) Your website. This is where you're going to send people to tune in, donate, give you feedback etc. So it's pretty important that the web address appear in your stream title, be mentioned in your sweepers, and that the site is clean, well organized and the links to tune in, and donate, are very visible and obvious. Don't just make those links part of your navigation menu. Feature them prominently right at the top and center of your home page in big lettering or graphics surrounded by empty space. A visitor should be able to see the tune-in and donate links within 2 seconds of the page loading. If they have to hunt for them in a menu somewhere, trust me - most of them won't bother. Offer PayPal for donations, and a Snail Mail address for people who would prefer to send in a check. About 5% of the money I raise comes in via Snail Mail.

I think that about does it as far as laying the groundwork for beginning a donation campaign. If you don't have these foundational elements in place, you're not ready to start a campaign. So work on those things, and give yourself the best possible chance of making any fundraising campaign a success.

The campaign
Time to actually raise money. First, expectations should be low. If you are able to raise one dollar a month for your peak listener capacity, you're doing well. So if you peak at 20 listeners, and you raise $20, that's good. If you peak at 200, and raise $200... well, you get the idea. Now, you may ask, I'm paying more than $1 per slot, plus royalties, so even if I raise that much, I'm not breaking even. My response... You're paying too much for your slots. Don't get cheap hosting, just lower the number of slots so you don't have massive unused capacity at peak, and... most importantly... lower the bitrate. 64kbps is an excellent bitrate for most users, especially if you run 64k mono. If you have over 200 tuned in, it's time to run a dedicated server instead of paying for slots. You can realize substantial savings that way. If you're seeing a peak in the 10-20 listener range, lower the bitrate and you lower your costs per-slot. Content is king, not bitrate. And low bitrate (64k, for example) streams have a higher tolerance for office internet link congestion, and are therefore less likely to break up or rebuffer in the workplace. The most exciting part about lowering your bitrate is that now you have an incentive for people to donate... a higher quality feed.

To generate listener donations, you have to give reasons, incentives, and above all else... you have to get on the mic and ask. Repeatedly.

Don't stick a link on your web page and assume that's it. Ask your listeners for help on the air. But remember, if they don't know you and you haven't spent time connecting with your audience, you're not going to see an overwhelming response. People donate to causes they support, and that would include you. So if they don't know the name of the person running the station, where in the world you live, what you do for a living, why you run a radio station... why would they care about your expenses?

I'm not going to get into techniques - that's not what this article is about. You have to find your own style and learn what works best for your station. But I will offer these interesting observations from first hand experience...

1) People donate the most on Tuesdays, Wednesdays and Thursdays between 11am Eastern and 4pm Eastern.

2) If you are able to be on "live", acknowledging those who have donated so far today, or recording an acknowledgement of those who have donated so far this month and playing that on the air, inspires others to donate too.

3) If you offer premium streams (128k for donors, for example) only about 30% of those who donate will use them, but those 30% will tell you it's a major reason why the donated. (I offer this incentive for my station's supporters, by the way)

4) People who donate once will be much more likely to donate again in the months ahead, provided your content isn't stale. Many of them enjoy the higher bitrate, and if that's offered for a limited time (which, economically, it has to be) then some view the next donation as a "renewal" to keep that better stream available for them.

Summary Asking for donations is a numbers game. If you only have 10 listeners tuned in daily at peak, you might get one donation a month even if you ask every day. The size of that donation may surprise you though. The biggest donation I ever received was $200. I've had several donate $100, but most will probably donate $10 or $20.

I hope this article helps you evaluate donations, just one of several possible ways to cover all, or part, of your expenses in running an online radio station. It's not supposed to be a "manual" - just some observations on what I have learned and what works for me. This article isn't intended to show you how to get rich. Just hopefully how not to go broke

Please share your own experiences with raising money for your station, whether through ads, donations, sales or other means. Feedback on this article is also welcome.

Source: Loudcity
Thanks to John!