Memorandum submitted by Impresario Media
LLP
Steve McCauley, Partner, Impresario Media LLP,
prepared this submission. The firm provides strategic and operational
advice, at board and senior management level, to multinational
clients and investors in media, communications and entertainment.
The firm has expertise in broadcasting, new media, music, film,
publishing and software.
The issue addressed herein:
Where the balance should lie between the rights
of creators and the expectations of consumers in the context of
the BBC's Creative Arcfhive and other developments
1. The divide between public service and
commercial activities at the BBC used to be relatively simple:
generally, after transmission, a programme passed into the BBC
archive, which meant that it could be exploited commercially by
BBC Worldwide or another third-party.
2. There has always been another divide,
at the BBC: licence fee money is to be used exclusively for the
benefit of UK licence fee payers; any activities outside the UK
are supposed to be commercial, hence the existence of BBC Worldwide,
whose duty it is to provide a commercial return to the BBC for
rights in which the BBC has invested.
3. This is why BBC America is, for example,
a commercial television channel and why BBC World (television)
carries commercials.
4. The Foreign & Commonwealth Office
pays for the BBC World Service and dictates its priorities: the
BBC cannot use UK licence fee money to subsidise the BBC World
Service.
5. In 1996, the BBC set up what has become
BBC.co.uk, one of the leading Web sites in the UK. Its success
has been achieved by relentless cross-promotion and very substantial
expenditure by the BBC, and by the exploitation of the BBC brand
and the BBC News operation.
6. The BBC's strategy since then has been
to colonise the Web, as well as other digital platforms, and to
position itself as relevant, in the digital age.
7. This has led to an erosion of the public
service/commercial divide and the UK/ex-UK divide.
8. The BBC has not, to date, limited the
use of its public service Web site to UK licence fee payers. This
means that a substantial amount of UK public money is being used
to subsidise that service for the benefit of people abroad, who
contribute nothing to the running of the BBC and whose use of
such BBC services is not paid for by commercial revenues.
9. The blurring of these divides has not
been the subject of proper public scrutiny, as it has been happening
by degree, often cloaked within "trials" of new services
or dressed up as extensions of existing ones.
10. An example of such erosion occurred
around 2000/1, when the BBC introduced the "BBC Radio Player".
This service allowed listeners to "catch up" with radio
programmes they might have missed. This was (and remains) a streaming
service, not a downloading service. The listener does not end
up with a copy of the programme to keep.
11. At the time, there was a bitter row
between the BBC and BBC Worldwide, as to which party should exploit
archive programmes in this way, and as to whether the offer should
be "free" or commercial.
12. In the end, and after months of arguments,
a fudge was reached: there would be a "seven day public service
window", during which time listeners could hear the requested
radio show again, at their PC. On day eight, the programmes would
no longer be available, other than commercially, from BBC Worldwide,
if it chose to market them.
13. It was certainly not agreed that the
BBC would give away digital copies of programmes as downloads,
under the Radio Player agreement, and yet this is now what is
happening in the "audio-on-demand" tests, as unprotected
MP3s.
14. In practice, the seven-day restriction
is fictional. Many BBC radio programmes remain available in the
"listen again" area of the BBC Web site, years after
they were first transmitted.
15. Furthermore, the BBC has not restricted
access to the Radio Player to UK licence fee payers, though such
a limitation is technically feasible. The service is global, at
the expense of UK licence fee payers.
16. Since 2003 and the launch of Apple's
iTunes service (and the popularity of the iPod), there has been
an explosion in the market for paid-for downloads, not only of
recorded music, but video, audiobooks, radio programmes, so-called
"podcasts" and other "digital goods".
17. The BBC has responded by seeking to
introduce a raft of new public service (ie free) audio and video
download services. These include the so-called Creative Archive,
the UK-only "iMP" video downloading test and the global
audio-on-demand/podcasting trials.
18. In the case of the audio downloading
trials, the "tests" will have lasted for fourteen months,
if they end in June 2006, as now planned by the BBC. The BBC might
call it a "trial", but this has all the characteristics
of a soft-launch of a new and heavily promoted public service,
without prior approval.
19. Outside the BBC, commercial media and
entertainment companies regard digital downloads as the next,
great product format, the natural successor to DVD and CD. Downloads
are "digital goods", to be sold or otherwise exploited
commercially.
20. The most valuable commercial window
is the one immediately after the original transmission of a programme.
The new video service from Apple iTunes, for example, sells programmes
immediately after broadcast. This is the very window the BBC now
wishes to enclose for the public service.
21. The BBC is seeking to extend the doctrine
of the "Seven Day Public Service Window" to digital
downloading. What was originally a compromise, for a catch-up
radio streaming service, argued over by BBC executives, has suddenly
and conveniently become a matter of corporate policy.
22. If it is right for the BBC to give away
free digital downloads, then why not allow the BBC to give away
DVDs of, say, The Office and Spooks, to anyone who
wants them, as part of the licence fee? Why bother with BBC Worldwide?
23. Normally, when people want to watch
or hear a programme again, they record it, or rent or buy the
DVD or CD. The BBC seems to want to move this commercial activity
into the public sector and is achieving this, by degree and without
public scrutiny.
24. At the time of writing, it has been
announced that Ofcom will have a role in assessing the market
impact of new services proposed by the BBC, but that the final
decision will be left to the BBC Trust. The BBC Trust will have
to weigh up the so-called "Public Value" versus the
market impact. There is no agreed definition for what "Public
Value" is supposed to mean.
25. This is a deeply unsatisfactory arrangement,
which cannot possibly deal properly with new services proposed
by the BBC. The job of the BBC Trust is to protect the interests
of licence fee payers, not those of artists, writers, producers,
rights owners, or other market participants. The BBC's idea of
"Public Value" is different from the wider public interest.
It is clearly in the public interest for there to be a vibrant
market in new media products and services, for new investments
to be made and for new companies to emerge, but this does not
figure in the BBC's definition of its own interests and its view
of the interests of licence fee payers.
26. Consideration should be given to the
introduction of a "Public Interest Test", which should
be applied independently of (and after) the Public Value Test
administered by the BBC Trust, in the case of proposed BBC services.
A Public Interest Test is especially important in new, digital
services. As BBC News reported, the Graf Report showed that while
"The theory that BBC's online services had an adverse impact
on the UK Internet market could be neither proved nor disproved",
nonetheless "There were indications that it [the BBC's online
service] may have had an adverse impact on competition, however,
particularly by deterring investment by commercial operators that
would have led to new forms of competition."
27. It is striking that in the BBC's home
market, no UK equivalent has emerged to compete successfully with
Yahoo!, MSN, AOL, Google or iTunes. This is to the great detriment
of the UK economy. It is a matter of fact that the leading American
Internet players did not have to compete with a publicly funded,
US equivalent on the scale of the BBC, as they developed.
28. Graf also stated that the BBC should
introduce a deliberate, "precautionary approach" to
investment in its online services. If there is a "close call"
between the public service benefits of a proposed BBC online service
and the costs of that service, the proposal should not be taken
forward.
29. There is no evidence that the BBC is
taking a precautionary approach in its current plans to develop
new digital downloading services; indeed, it is deliberately doing
the opposite.
30. There should be an independent inquiry
into the principle of a BBC public service new media window and
into the principle of a new public service role for the BBC, outside
the UK.
28 February 2006
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