Creating Profitable Revenue Streams for Your Community Media Center

Thurston Community Media (TCMedia), based in Olympia, Wash., has four channels on Comcast in most of Thuston County, as well as three channels on Consolidated Communications in Yelm, Wash. And Deborah Vinsel, CEO of TCMedia, is fighting the rapid decline of franchise fees by exploring earned revenue opportunities.

Of course, it’s important to differentiate earned revenue from fundraising. Fundraising is philanthropy, with people giving money to your PEG channel because they believe in your cause. In contrast, earned revenue is generated from services and fees.

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“Generating income through fundraising, donations and grants can take time to bring in meaningful revenue,” Vinsel advised. “You can start diversifying revenue streams immediately by charging the right amount for the equipment, facilities and services you already offer.”

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Vinsel also conceded that many PEG organizations aren’t exactly comfortable with charging for their services. After all, many channels have an agreement with the local government that provides some level of funding based on franchise fees. “For a lot of us, the fact that we have to charge at all is hard,” she said, “but we need a robust earned revenue stream so we can continue to support traditional events and other programs in community media.”

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How do you set your rate? TCMedia’s contract services rate, including equipment, is based on several factors. In fact, Vinsel has developed her own three-step formula, which she shared with us (see chart).

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First, Vinsel adds operating costs and capital costs. Some organizations fail to account for all their expenses when setting a rate. Your formula should include everything from salaries and insurance to rent and equipment purchases. “You want to make sure that you’re charging a fee that can pay for things when you’re not charging a fee,” she added.

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Next, she divides that total by the number of total staff hours annually based on an annual work schedule of 2,080 hours for every full-time employee. That number is TCMedia’s cost per staff hour, or what she calls the “hard number,” which is the rate required to simply cover expenses. “You want to make sure you’re covering 100% of your cost,” she explained.

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Finally, she adds a percentage for profit (she uses 70%) to determine an hourly rate for services. To keep things simple, TCMedia’s hourly rate includes equipment and personnel.

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You don’t need to follow Vinsel’s formula, but she stressed the importance of having some sort of policy in place. Part 2 will explore why community media organizations need to seriously consider earned revenue opportunities, as well as some best practices to consider. Subscribe to the PEG Experts Series here to get Part 2 directly in your inbox.

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