Our Society, by the numbers

Why is National Geographic slapping its name on area rugs and air freshener, and putting its iconic Yellow Rectangle on TV shows like Sex for Sale: American Escort?

For a different perspective on the problem — and on the daunting challenges faced by John Fahey, NGS Chairman & CEO — take a look at some of the Society’s basic financial numbers, which I pulled off the most recent 990s that are publicly available at Guidestar:

Trying to interpret 990s is a tricky business, of course. They’re often incomplete, confusing, and not entirely consistent year to year. That said, there are still a few trends worth noting. From 2007 through 2010:

  • Net revenue dropped by more than $73 million — or 92%. And while investment income took a beating when the stock market collapsed, our portfolio began to rebound in 2010. Program revenue, though, went down by almost $60 million.
  • Net assets fell in value by $132 million (15%).
  • Membership revenue (dues) has dropped by more than $21 million. Since 2001, annual membership revenue has fallen more than $47 million — a 26% decline in just eight years. What’s especially sobering is this collapse reflects the publishing world before the iPad, which was introduced in April 2010. (Given this nosedive, it might be a good idea for Editor Chris Johns to say something to our members other than: Hey! People! Have you seen our latest rhino pictures?)

That’s the bad news — or some of it, anyway.

The good news, if you’re simply counting the money, can be found at National Geographic Ventures (NGV), our Society’s wholly-owned and taxable subsidiary. NGV is the corporate umbrella for all our new media and digital initiatives. It’s also the legal home of the National Geographic Channel, which is majority owned by Rupert Murdoch’s News Corp. (NGS has roughly a 25% stake in this joint venture.)

From all indications, the Channel appears to be a huge financial success. Exactly how big a success for NGS is difficult for me to quantify because NGV’s tax returns are not available to the public. But the 990s provide a hint about how much money is coursing through the Channel. On Schedule R (Related Organizations and Unrelated Partnership) in the 2010 filing, you’ll see this:

Column “f” says our Society’s share of the Channel’s income is more than $183 million; about half that amount is paid to the Society, while the remainder is retained to help the Channel grow. And grow it has: column “g” — $1.4 billion — represents the Society’s 25% share (approx.) of the total $5.6 billion value of the Channel itself.

$1.4 billion out of $5.6 billion. That’s pretty serious money, especially when the Society’s initial investment in the Channel was less than $140 million (I think; still checking).

How did the Channel do it? Why is it generating such impressive returns and experiencing such dramatic growth?

The short answer: People apparently love the programs about gangs… Nazis… drugs… prisons… sex addiction… prostitution… the Bikini Test… men who are sexually intimate with inflatable dolls… a woman who is addicted to having sex with strangers in a parking garage (with requisite on-screen analysis by a behavioral scientist)… Cops… lesbians in a Brazilian jail… and so on & so forth, ad nauseam.

Programming brilliance? Not really.

Then again, this discussion really isn’t about Rupert Murdoch. We’ve always known who he is.

In the end, this is about who we are, and who we want to be – as a Society and as a society.

♦  Can National Geographic put its iconic name & logo on fairgrounds & brothels (the Channel) and, at the same time, on libraries & nunneries (i.e., the Magazine) — and still be taken seriously by the public?

♦  Can National Geographic build a sustainable future on a network of brothels, which are raking in the cash, while the libraries wither on the vine — and the Society’s members continue their mass exodus?

♦  Most of all: How can John Fahey manage the National Geographic brand when the Channel, which reaches hundreds of millions of people around the world, is beyond his editorial control?

Put another way: What happens to The Brand’s hard-earned reputation when the Channel showcases stuff like this in prime time…

… and programs like this one called Sex for Sale, which is about “high-end sex work”…

… while our Chairman & CEO shows this earnest face to the public:

From a no-nonsense, hard-headed business perspective,
is this wise brand management?
And: Is it sustainable? 

That’s what we’ll be exploring next with an expert in brand management.

 

“People are more magical than the iPad”

Scott Heiferman

Scott Heiferman, CEO of Meetup

Watch Us! See Us!
Download us! Join us!
Friend us! Contact us! 
 Follow us!

Enough about “us”!
It’s a false sense of membership.
It’s an illusion of engagement.

What about connecting them
to each other?
You’ve got followers. Now what?

I just discovered this presentation (below) by Scott Heiferman, CEO of Meetup, which he delivered at the 2010 Personal Democracy Forum. Scott makes some great points about the dynamics of groups, and about why people belong to them. His general argument (listen for his “Erins are everywhere” riff) is a wonderful refutation of what John Fahey, CEO of NGS, told me back in 2006: Nobody wants to belong to anything.

Evidently they do:

cc: Robert Michael Murray, National Geographic’s VP for Social Media

What if NGS was owned by its members?

By Jeff Bercovici, Forbes Staff

September 7, 2011 

… With some 112,000 shareholders, the Packers are the only publicly owned team in America. Add to that Green Bay’s distinction as the country’s smallest major league sports market and they seem a nostalgic aberration amid megamoneyed rivals like the Dallas Cowboys and New England Patriots. The longstanding line among football aficionados pegs the Packers as a charming welfare case that exists thanks only to the sufferance of other, richer NFL franchises. They allow the team to stay put in tiny Green Bay as an emblem of the league’s working-class roots.

The problem with that story: It isn’t true.

In reality the Green Bay Packers are an emerging financial power in the NFL. Despite their minuscule market, revenues for fiscal 2010 hit an alltime high of $259 million, 11th out of 32 teams and well above major-market franchises like the San Francisco 49ers ($234 million) and the Atlanta Falcons ($233 million). The Packers are regularly one of the 15 teams that pay into the league’s reserve fund rather than draw from it (so much for welfare). Their Super Bowl win, coming enhancements at the stadium and the league’s new collective bargaining agreement with players will make them stronger still.

….

But if leaguewide TV deals and salary caps help the Pack stay on par with rivals, it’s their unique relationship with fans that puts them in the top tier financially. From the first of four public stock offerings in 1923 (shares are nontransferable) through the Vince Lombardi era to last year’s Super Bowl win, the team has crafted deep ties to their followers. When FORBES ­recently ran the numbers on which NFL faithful were the most passionate (comparing television ratings and Internet traffic to market size) the Cheeseheads emerged on top. Every home game since 1960 has been a sellout, and the waiting list for season tickets is 88,000 strong. In 2010 the Packers led all NFL teams in merchandise sales, and they lead  in local per-fan revenue at $312 (the league average is $41).

Read the whole thing here.

 

 

Moore: Shake each money tree (e.g., you), but harder

October 5, 2011

As publishers try to cope with a feeble ad market by wringing more money out of readers, the membership model is gaining interest.

Declan Moore

Companies like Atlantic Media, National Geographic, and Condé Nast are exploring models that would offer a combination of their print titles and other perks or services like research or special access to events or product sales. “We are all looking to raise [average revenue per user], or in our instance, [average revenue per member],” says Declan Moore, president of National Geographic Publishing….

It’s not often we find a quote that encapsulates one of National Geographic’s biggest strategic errors, but Declan Moore’s statement comes close.

By trying to boost average revenue per member, he wants to shake each money tree (you and me) even harder — instead of trying to cultivate a bigger, lusher forest (more members).

Imagine two scenarios:

#1: The National Geographic Society has only one member — an eccentric trillionaire who wants his monthly copy of National Geographic magazine printed on paper gilded with gold leaf, all bound beneath a cover studded with rubies and diamonds. He also wants the Magazine — and a box of Godiva chocolates — hand delivered to his estate each month by John Fahey, National Geographic’s CEO and Chairman of the Board. Our hypothetical trillionaire pays his annual dues — $1 billion — which keeps NGM humming. And Declan Moore’s metric — average revenue per user —  is off the charts, which makes Declan smile.

#2: Our Society has 100 million members, each of whom pays only $10 per year. Total revenue is also $1 billion, but “average revenue per user” is very low.

Declan dreams about Scenario #1.

We dream about Scenario #2, where more people come to our party — enabling our Society to give its members more while squeezing them less.

What would draw people our way? The collective buying power of the Society’s (still) very large audience. The excitement of a story that welcomed people as participants. The pride of being part of an organization that promoted freedom, human rights, and democracy. And the realization they could accomplish more together than they can accomplish alone.

Remember our exchange with John Fahey in 2006? The key take-away, paraphrased:

Q: Does the word “Society” have any value to you when you market National Geographic? Or is the word just a vestige from the old days that gets in the way?

John Fahey: It mostly gets in the way. Nobody wants to belong to anything. People just want what they want. 

How can you increase the National Geographic Society’s membership when you see the world this way?

John Fahey, Chairman & CEO of the National Geographic Society

 

Our “unbiased” Society has a Pension Plan shortfall this year of approximately $23.8 million

Chris Johns

National Geographic magazine, says Editor-in-Chief Chris Johns, “is the official journal of the Society.”

National Geographic, Chris says, is “a membership-based organization.”

National Geographic magazine, Chris says, is “unbiased.”*

To sum up: The official journal of our membership-based organization has no particular point of view.

In related news: The National Geographic Society’s Pension Plan just announced it failed to meet its legal funding obligations for 2011.

To meet that legal minimum, our Society needs enough cash to cover at least 80% of its pension liabilities.

Current pension assets: $230,507,726
Current pension liabilities: $317,937,246
Legally required assets-to-liability: 80%
Actual assets-to-liability: 72.5% to 74.2% (depending on method of calculation)
Assets needed to meet the 80% minimum: $254,349,796
Shortfall: $23,842,070

New restrictions on pension benefits were recently announced in a notice (excerpts above) sent by our Society's Human Resources division on April 30, 2011. (Please click image to view larger version.)

_____

Dear John:

The HR notice says:
“It’s normal for a plan’s funding percentage to change from year to year.

It’s the long-term trends that matter the most.”

We hope, as you probably do, that these pension troubles are temporary.
But the fund’s “long-term trends” are largely dependent
upon your long-term plans for NGS.

Which begs the question:
Do you have a long-term plan for NGS?
If so, what is it?

_____
* For an extended refutation of Chris Johns’ claim that our Society has been “unbiased” for more than 120 years, please see this.

≡  photo of Chris Johns via Folio

Why is our Society giving away our biggest asset?

“… Publishers who have chosen to hand over their entire communities to Facebook are likewise choosing to give up the entire value of their community. What this means is that they no longer have any data on loyal commenters, and no email addresses, which means no ability to communicate with them again. They’re no longer your users, they’re Facebook’s.

You’re giving a huge strategic and valuable asset to Facebook. They understand the inherent value of comments and community, and are attempting to take it out from underneath publishers before they even realize what’s happened.  And we’re back to where we started—publishers don’t quite understand the value of their communities yet.”

— from “What’s Easy is Not Always Right,” by Jordan Kretchmer (TechCrunch, April 9, 2011). Mr. Kretchmer is the founder of Livefyre, a social commenting system for blogs and sites.

Confronting The Dictators

Tahrir Square, Cairo, Egypt, at 11 PM, January 25, 2011

From Alexis Madrigal at The Atlantic:

This gripping photo has been bouncing around the Internet today. If the protests of the last few days manage to extract meaningful reform from the Egyptian government, it could enter the pantheon of iconic protest images epitomized by Jeff Widener’s tank man.

Apparently, it was shot by an Egyptian Reddit user named latenightcabdriving. He posted it to the social network about five hours ago, and it already has 1883 “upvotes.”…

Though the point is fairly obvious, it should be made for posterity. The widespread availability of good digital cameras, the diffusion of the skills to operate them, and the networks to spread them as the protests are going on has given activists a potent new tactic. … No need to hope mainstream media shows up. No need to wait for tomorrow’s papers. Everything can move quickly….

Which begs some questions:

•  How much longer will Chris Johns, Editor of National Geographic, insist on keeping “amateur” photographers sequestered in the Magazine’s Your Shot ghetto?

•  When will an Editor of National Geographic use the internet to truly tap the potential of the “the widespread availablitiy of good digital cameras [and] the skills to operate them”?

•  What will convince National Geographic that our Society’s center of gravity has shifted away from 17th & M Streets?

National Geographic members aren’t mounting any mass protests, of course. They don’t need to confront the executives who are defending the status quo. Instead, millions of NGS members are simply walking away — and taking their money with them.

Who is filling the Society’s financial hole? Corporate “partners” such as Shell, Dupont, Porsche, and Lipton. You might call that a business plan, but we challenge you to call it a sustainable one.

_____
≡  photo by latenightcabdriving via The Atlantic

Using social tools for (mostly) solitary ends

We don’t hear much from Robert Michael Murray, the Society’s VP for Social Media. But here’s a little sound bite from the MPA’s inaugural Social Media Conference, where Robert was a panelist:

Robert Michael Murray

“We get caught thinking social media is this bright new shiny bullet,” Robert Michael Murray, vice president of social media for National Geographic, said. “Magazines have been doing these things for 100 years.”

But Murray seemed to be against the idea of selling advertising across Nat Geo’s social products. “I walled that off [from advertising],” he said, adding that he spars with the marketing team over his hard church-state stance. “It’s content driven.”

We wish Robert well in that church-state struggle, especially since it often seems like a losing battle.

We’re puzzled, though, what Robert means by “doing these things for 100 years.” What “things”? The things that social media can do? If so, he’s omitting an obvious point. (Or the reporter did.)

If you go back 100 years… or 50 years… or even 5 years, it was virtually impossible for members of National Geographic to communicate directly with each other. In fact, there was no way for a Society member to identify other people who belonged — unless you paid top dollar for the NGS mailing list. Communication was top down, Editor to readers (one to many); not lateral, member to member (many to many). Which meant that membership was a rather solitary experience: You, in your armchair, with your Magazine, gazing at pictures of cheetahs and bare-breasted women.

Today, all sorts of eye-popping technology exists that could enable Society members around the world to connect with each other online. We have the potential to communicate laterally. We could make the experience much more social. We could be a networked Society, which would open up all sorts of new opportunities. But NGS has kept that door shut. Instead, Society managers prefer to keep our eyes focused on their stage, and to drive us to their content.

Why is that, Robert?

Harvard Business School: The NGS Case Study

This just in — a new case study about the National Geographic Society by the Harvard Business School.

We bought a copy ($12), and will have lots more to say about the study in the days & weeks to come. But for now, we wanted to share this passage about one of our favorite subjects — membership:

[CEO John] Fahey created a cross-functional team, called the Membership Task Force [that] spent 12 weeks developing and evaluating new membership models to support the NGS mission, engage members, differentiate NGS from other media, generate revenues, and “unify our message and our audience.”

The team found that current “members” viewed themselves primarily as subscribers and not as belonging to the Society. NGS promoted membership solely through its marketing of the magazine, with a narrow set of benefits. “We do a superb job at telling the world’s stories, but are not effectively telling our own story,” the Membership Task Force concluded.

The task force saw an opportunity to extend the membership platform and expand recruitment to all NGS readers and consumers, making membership a meaningful experience that “engages, inspires, educates, and involves our audience.” “Every futurist and sociologist speaks of increased alienation and isolation in modern society, a trend that is growing and is worrisome,” the task force explained. “Most talk about the basic need people have for a sense of belonging to something larger than themselves to give their lives meaning, context, and relevance. We can do so. . . We just need to learn how to market [it].”  [emphasis added]

Amen & hallelujah! But… uhh… what’s the “it“? What’s “our own story” that we need to market?

In its 122-year history, National Geographic has embraced so many different story lines. Some have been inspiring; others have been disastrous. Some have spoken to us like citizens who are key players in a great and historic drama; others have addressed us as custodians of a planetary museum. Some are uplifting and engaging; others are a burden. Some draw us in; other make us flee.

Which story should our Society be telling?

More on the HBS case study, coming soon….

That Sinking Feeling

Paid circulation
(a.k.a. the number of National Geographic Society members)
has fallen south of 4 million.

In 1988, it was 10.2 million.

The nosedive continues….
_____

per NGM, December 2010

_____
It’s worth noting that an additional 1.3 million copies are “single-copy sales,” which includes the newsstand. While selling individual issues of NGM at Safeway is nice, it’s not nearly as reliable a revenue stream as membership. Far better for the Society to build its future around people who say: I belong. I’m a member. I’m with you for at least a year (and often longer).

Also: 360,000+ copies for “Office use, leftover, etc.”? That’s a whole lotta trees, especially for an organization dedicated to “inspiring people to care about the planet.”

NO NEW POSTS will be published here after February 6, 2014. THIS IS WHY.