Memorandum submitted by the BBC
SUMMARY
— Against the context of very rapid
change in technology, consumer behaviour and consumer expectations,
the BBC has a clear vision of the future of broadcasting—and
the role and responsibilities of a public service broadcasting
in that future.
— The principal objective of the BBC—now
and in future—is in investing in high quality original programming
and making it available to as many people as possible. The technological
changes we see make it necessary to redefine the distribution
channels that we use and to address the implications of that redefinition.
— We recognise the critical importance
of finding the right balance between extending universal access
to content (a core duty of a public service broadcaster) and allowing
rights holders and content creators to realise value from their
intellectual property.
— Very complex issues are raised by
the changes in the industry and market and solving them requires
both close partnerships, between the BBC, its commercial partners
and the creative industries that create content and hold the underlying
rights, and a willingness by all parties to look at innovative,
dynamic models of disseminating programming and capturing value.
— The BBC will use technology to restrict
access to some content for consumers overseas, ensuring that the
licence fee primarily benefits UK audiences and maintaining the
role of BBC Worldwide as a commercial exporter of BBC content
internationally.
— The BBC's core approach to delivering
on-demand content in the UK is based around the concept of three
windows where listeners and viewers can: catch-up with programmes
after they have been broadcast; where they are then available
for commercial exploitation; and where most programmes then pass
into a public service archive where they are available to all
licence-fee payers. This approach seeks to balance for the licence—fee
payer the benefits of access to the programmes they have paid
for against the increased costs, and forgone revenues, of providing
such access.
— This proposal—amongst others
for the new Charter period—will be conducted within the
new framework of transparent, rigorous and accountable governance.
CONTEXT : THE
CHANGING MEDIA
WORLD
In June 2004, the BBC published Building
Public Value, the BBC's vision for its role in the forthcoming
charter period and beyond. It described the transformative potential
of new media for UK audiences—both as citizens and as consumers—and
noted that:
"Digital radio and TV audiences will soon
have the same flexibility as internet users to control when and
where they watch and listen to programmes. We expect seven in
ten homes to be able to schedule their viewing and listening at
a time that suits them best by 2016. Many will use personal video
recorders (PVRs), which will be able to hold as much as 4,000
hours of content (equivalent to six months of output of a 24-hour
television channel), compared to just 40 hours today (see box
below). At the same time, downloading and file sharing of video
and audio from the internet will become commonplace for many people."
Since Building Public Value, the scope and scale
of these changes has become even clearer.
In the commercial market, media and telecoms
giants are accelerating their development of comprehensive packages
for consumers, encompassing mobile and fixed telephony, video-on-demand,
broadband internet access, as well as traditional linear TV and
radio. BSkyB is piloting new services via broadband, and its competitors
NTL and Telewest are merging—enlivened further by their
proposal to acquire Virgin Mobile which would create a multi-platform
rival to both BSkyB and BT.
Consumers are also voting with their wallets.
Eight million adults now own a portable MP3 player, with 5.9 million
of them using it every week. Apple is seeking to continue its
success in this market by offering new video-enabled models, with
US broadcast networks now offering downloads of their most popular
shows. In linear media, digital growth is also continuing apace.
Over 70% of homes now enjoy access to digital television. Digital
set-top-boxes that enable analogue televisions to receive digital
signals now come equipped with hard disk drives to record television
for replay on-demand. DAB take-up is increasing in speed—with
industry bodies predicting that cumulative sales had topped 2.5
million by the end of 2005.
Radio provides an example of convergence in
action. Recent research by RAJAR reveals that 9.7 million adults
have listened to the radio via the internet, 4.6 million of whom
do so every week. 17.3 million adults have listened to radio services
available through their television—with 57% of them listening
in this way every week. Three million adults claim to have listened
to the radio via their mobile phone.
We believe that the pace of these changes heralds
a "third age" of broadcasting, driven by this proliferation
of digital technology and by the changing expectations of audiences.
The "first age" was a time of linear
channels and limited choice on both television and radio. The
launch of BSB and Sky Television in the late 1980s began the "second
age" of broadcasting, characterised by vastly expanded choice
for audiences but a continuing emphasis on linear scheduling.
The launch of digital TV and DAB further increased choice, and
have laid the foundations for the future of broadcasting. The
"third age" is now approaching fast. This is a fully
digital world, where huge choice is accompanied by a proliferation
of ways to view and listen (on PCs, mobile phones, digital TVs
etc.), and by a growth of on-demand services that permit viewing
and listening whenever it is convenient.
The concepts of "timeshifting" and
portability have become part of the everyday. So much so, that
the New Oxford American Dictionary named "podcasting"
(the publication of audio content online in a form that can be
transferred to and consumed via an iPod or other MP3 player) as
its "word of the year" for 2005.
But the central issue—about what will
be available for consumers to watch, listen to and interact with
in the new world—is the key concern of the BBC. Increasing
choice is not always the same as increasing or sustaining quality
and variety—and the clear role of the BBC is to continue
applying the principles of quality, independence, impartiality
and universality to meet the needs of all audiences. The BBC brand
embodies these values, both in Britain and internationally, giving
the Corporation a powerful role in this changing world.
ADAPTING TO
THE NEW
WORLD
This is a world of near infinite choice and
intense global competition—and audiences are already adapting
to its possibilities, demanding that brands and services they
trust keep pace with change. In this third age of broadcasting,
a wide variety of international players are converging on UK audiences—distribution
networks, software providers, device manufacturers and content
creators. Change is affecting each of them.
The distribution networks provide access points—DSL
broadband connections, cable, 3G mobile, satellite and more "traditional"
modes like terrestrial broadcasting. Some of these channels provide
almost unlimited shelf-space for content, and have the capacity
to deliver data and content streams at previously unimaginable
speeds. However it is worth noting that very high speeds currently
can only be achieved in some urban areas.
The devices that connect to these distribution
channels are becoming more powerful—with more storage capacity
and greater functionality. By way of example, the capacity of
Apple's iPod has increased 12-fold in three years, while the cost-per-gigabyte
of storage has halved each year. Less portable devices are also
growing in size—with Personal Video Recorders now routinely
allowing 100 hours of television to be stored and replayed on-demand.
All of these devices are now commonplace.
The software that users need to access content
and services through these networks and on these devices is also
becoming more powerful and more sophisticated. Sky's electronic
programme guide is just one example of a familiar navigational
tool, but Google and Yahoo are both positioning themselves as
comprehensive directories of audio, visual and text content. Other
software helps users to organise their content, or to decrypt
copyright-protected files. It is putting audiences more in control
of their own viewing and listening: jumping from programme to
programme, medium to medium, scheduling their own entertainment,
and in some cases, even producing their own for others to share.
Finally—and most critically—there
are the content creators and rights holders who fill this digital
world with compelling music, films, programming and information
that can capture the imagination of audiences. Content creators
need to meet the creative challenges of this new world: where
programmes, films and audio need to attract audiences, and be
suitable for consumption on a wide range of devices. Producers
of popular drama, for example, will need to consider how their
programmes will look on a 4cm x 5cm portable screen, as well as
on a huge widescreen plasma television.
The proliferation of platforms and business
models also raises crucial economic, legal and regulatory considerations.
CHALLENGES AND
OPPORTUNITIES FOR
THE BBC
Whatever the changing patterns of consumption,
the BBC is absolutely convinced that its role in investing in
radio & TV content will remain crucial and that the main public
service and commercial broadcasters in the UK will remain the
most significant investors in new, original UK TV content for
the foreseeable future. A report for the BBC published in 2003
concluded that the UK spends more per head on domestic TV content
than any other country in the world—including the US. The
BBC has played a central role in this outcome, accounting for
40% of all spending on UK television content, and the report suggested
that as commercial broadcasters are put under pressure by audience
fragmentation and increased competition, the relative importance
of the BBC's contribution to content creation will increase.
The entry of players such as BT and Google into
the UK's on-demand market will result in new revenues for the
content sector through their investment in the acquisition of
new media rights. However free-to-air television will retain its
key role in making and commissioning new original content, and
then ensuring universal access to this high quality programming
in a whole range of genres. The security of the BBC's funding
and its unique mission mean that it is well placed to take creative
risks in difficult genres such as comedy, current affairs and
landmark factual programming.
The BBC is at the leading edge of change, as
a major content creator and distributor. If the UK's leading public
service broadcaster does not adapt to the changing behaviour and
preferences of its audience, public service broadcasting itself
will begin to decline in impact and relevance.
The challenge is made greater by the ease with
which digital media can currently be copied, distributed and shared
between users. Piracy is now as much of an issue for the media
industry as it has been for the music industry. By way of example,
earlier in 2005 the first episode of the revived "Doctor
Who" was leaked onto the internet. Tens of thousands of fans
were able to download the episode from sites such as Bit Torrent
even before it had been transmitted on BBC One. Stepping up copyright
enforcement efforts is one response to this kind of situation—but
it can only be part of the solution. In common with the music
industry, we believe that an essential component of any anti-piracy
strategy must be to provide alternative, legitimate means of providing
audiences with content that they might otherwise access illegally,
with no benefit to rights holders and content creators.
5,000 households have taken part in the trial
of one of the BBC's responses to this new world—a legal
system providing temporary downloads that will become part of
a comprehensive integrated media player currently called "myBBCplayer",
building on the success of the BBC radio player. Still in development,
this is a system that will provide a legal way of accessing the
BBC's audio and visual content, within clear and technologically-managed
limits. The trial allows users to view content typically for a
week following the first transmission of a programme on one of
the BBC's linear channels. Through systems such as myBBCplayer,
audiences will be given legal ways of meeting their desire to
timeshift and transport BBC content in which their licence fees
have been invested.
The idea of the Creative Archive was announced
as part of the BBC's Building Public Value manifesto, and
is a particularly innovative example of an on-demand service that
could offer licence fee-payers something genuinely new and enriching.
It would allow users to permanently download, re-use and include
material in new work that they create themselves. It could be
particularly helpful in supporting lifelong learning—with
students, for example, being able to incorporate BBC material
into school or university projects, and home users developing
their own personal hobbies and passions. However, it is important
to note that it is likely to be only a small part of the BBC's
overall archive strategy.
As these propositions are developed, trialled
and—if they pass the rigorous approvals process outlined
in the government's Green Paper—then launched, the BBC will
work with its partners in the creative industries to develop appropriate
rights models. These models must allow the BBC to sustain the
impact of public service broadcasting by delivering it in new
ways, while preserving (and wherever possible building) commercial
value that rights holders can extract and reinvest in the creative
industries. One of the main concerns for the BBC as it adapts
to this changing world is to ensure that it continues to secure
the rights that will permit on-demand and new media exploitation.
The Secretary of State has termed the licence
fee "venture capital for the creative industries". From
a rights perspective, this is particularly true. The BBC currently
spends nearly a billion pounds a year on rights of some form or
another—payments to the music industry, to independent producers,
to contributors and content creators, sports rights holders etc.
The BBC invests much of the licence fee in UK creativity of all
sorts—in filmmaking, musicians and composers, dramatists
and screenwriters, comedians etc. Radio 3 remains the largest
commissioner of new classical music in the world—with 250
composers receiving commissions in the last five years. The BBC's
role as a cultural patron has been reinforced by the Green Paper,
and "stimulating creativity and cultural excellence"
has been redefined as one of the core purposes of the BBC during
the next charter period.
Over the years the BBC has generally enjoyed
a very good relationship with rights holders and the organisations
that represent them, and a strong sense of mutual dependency and
support between the BBC and the creative industries. These relationships
will become even more important as we all face the challenges
of a rapidly changing world. New partnerships will be needed for
this new world that recognise both what the audience expects from
a public service broadcaster, and the importance of protecting
and nurturing the position of content creators.
To this end the BBC is working with rights holders
and content creators to help them fully understand its plans,
and listen to their views and seek to address their concerns.
Solutions will be found that maximise the public value of the
BBC's investment, while respecting the importance of future commercial
exploitation.
There are numerous examples of the BBC working
successfully with the industry to make our content available on-demand:
for example on the cable platform, on Homechoice (broadband) or
the recent agreement with Orange to make BBC comedy clips available
on mobile phones.
In the summer of 2005 the BBC launched a download
trial as part of its Beethoven season. Recordings of all nine
Beethoven symphonies performed by the BBC Philharmonic Orchestra
were made available for download for seven days after broadcast.
Prior to the trial the BBC sought the views of the Association
of British Orchestras, the Musicians Union and two of the major
classical record companies and the general consensus was that
this was a worthwhile experiment in order to test the market.
It was agreed at the time that the BBC would share any information
learned with the record industry. The resulting demand took everybody
by surprise and whilst controversial also demonstrated widespread
demand for content delivered in this way. Since that experiment
the BBC has, as agreed, shared all the information learned with
the BPI who in turn have shared their figures on the impact on
CD sales. The figures show that the overall effect of the raised
profile of Beethoven during the experiment, and the over 1 million
attempted downloads, resulted in an increase in CD sales of over
109%, creating a positive market impact.
It is worth noting that podcasting is becoming
increasingly popular. Public service broadcasters in Sweden &
Denmark have offered free downloads of Mozart symphonies played
by their in house orchestras, and in UK The Times has announced
that it will offer free music podcasts every week. Meanwhile,
the evidence emerging from the BBC's podcasting trial gives an
indication of its popularity: In December the Chris Moyles weekly
20 minute podcast featuring speech highlights from his Radio 1
programme was downloaded nearly half a million times, only slightly
more than the 413,492 downloads for the Today programme's 8.10
interviews during the same month.
DEVELOPING AN
APPROPRIATE RIGHTS
STRATEGY FOR
THE FUTURE
The challenges that the BBC and others face
in securing a modern rights strategy for the on demand world are
many and varied.
The BBC must strike new partnerships with rights
holders that demonstrate how the BBC's public services can support
and complement commercial activities. Our recent music deal with
Universal Music is just such an example, which allows Universal
to exploit BBC archive material that features their artists. CDs
can be released, for example, of archive Radio 1 or 6 Music sessions.
This kind of mature, mutually beneficial relationship builds public
value for audiences by securing access to music, and providing
opportunities for rights holders to realise commercial value.
BBC Worldwide, whose global English language
exports are second only to Hollywood studios, plays a key role
in distributing British content, from the BBC and others, to UK
secondary channels and platforms, such as UKTV and mobile phones,
and globally in exporting the best of British television. BBC
Worldwide sees new technology and distribution channels as a way
of increasing these exports.
Modern deals are being concluded with talent
unions, collecting societies and other representative bodies that
are designed to be flexible, cost-effective and future-proof.
As this paper has outlined, the BBC intends to continue its commitment
to originating and commissioning new UK content. In the digital
world, this will require clear and flexible frameworks for acquiring
underlying rights, and rewarding rights holders and content creators
for their work—now and in future. One of the ongoing challenges
in recent years has been clearing and re-clearing archive material
for use on new platforms (such as for the BBC's digital radio
stations).
The BBC must also consider the rights frameworks
that underpin our relationship with independent and other external
producers. The Code of Practice for television commissioning that
has been in place since January 2004 has been instrumental in
clarifying the ownership of primary and secondary rights. The
challenge is to keep this framework relevant in a changing world,
always ensuring that the right of independents commercially to
exploit their intellectual property does not impinge on the BBC's
ability to serve the licence fee-payer. To that end, the BBC is
actively participating in Ofcom's current review of the Television
Production Sector, which inter alia is examining the future
of new media as a means of distributing commissioned content.
With the emergence of downloading as a mode
of distribution (in tandem with live streaming), implementing
effective Digital Rights Management (DRM) becomes more crucial
as a way of preventing piracy. Effective use of technology can
also assist the BBC as it seeks to protect the interests of licence
fee-payers by restricting access to some content for consumers
overseas. The use of a technology called GEO-IP can allow the
BBC to erect a fence around UK-funded content, ensuring that the
licence fee primarily benefits UK audiences.
The BBC, like others, must develop effective
methods for enforcing its copyrights—and the copyrights
of others. But to repeat, the BBC believes that this must go hand-in-hand
with increasing access to content through legitimate means. Such
an approach also creates the opportunity for the BBC to raise
awareness of copyright issues through information and educational
programmes, and through new websites that can be targeted at young
consumers.
The fundamental model that the BBC proposes
to balance the interests of licence fee payers and content producers
in providing on-demand content through the integrated MyBBCPlayer
referred to above is based around three "content windows":
— Window One—catch-up: viewers
and listeners will be able to see or hear any programme within
a short period after its transmission, say seven days as in the
current trial, providing that the BBC can obtain rights clearance
for those programmes not made in house. We plan that a limited
volume of TV and radio programming would also be made available
for "series stacks", where entire series would be made
available for the duration of their run plus seven days.
— Window Two—the commercial window:
the commercial window would open at the end of the window one
holdback period. BBC content would be available for commercial
exploitation, say through subscription channels (such as UKTV)
or download via IP or mobile networks. The amount of time which
programmes will spend in this commercial window will vary by genre.
Programming that is no longer generating a commercial return would
then be made available for the BBC's archive in Window Three.
— Window Three—the Public Service
Archive: the public service archive would consist of programming
that has either passed out of the commercial window or—in
the case of some content—has come straight from window one.
The scale, richness and development of this archive will be proportionate
to the resources that the BBC can devote to it and its ability
to negotiate the relevant rights in perpetuity.
While the BBC is clear about the principle—balancing
for the licence—fee payer the benefits of access to the
programmes they have paid for against the increased costs, and
forgone revenues, of providing such access—the detail and
in some areas surrounding rights acquisition, the practicalities,
remain to be resolved. We would very much welcome the views of
the Select Committee as to how these proposals can best be developed
to meet the interests of licence-fee payers.
THE CREATIVE
ARCHIVE
The Select Committee specifically mentions the
BBC's Creative Archive initiative in the terms of reference for
its inquiry. This is therefore a welcome opportunity to clarify
the scope of this innovative project, and to provide some reassurance
on its implications.
This evidence has already outlined the aim of
the Creative Archive, and places it in the context of a full range
of on-demand proposals. The BBC recognises that by offering to
share content rather than offer "another opportunity to view",
the Creative Archive raises some of the most complex issues for
rights holders and content creators, including the issue of "moral
rights".
This is why it is essential that the Creative
Archive is being built in partnership with others. The current
partners in the project include the BBC, Channel Four, Teachers
TV, the British Film Institute, the Media Trust (for the Community
Channel) and the Open University. The aim of the project is to
create a substantial—but selected—national archive
of audio visual material in the public domain that is available
for users to download, manipulate and reuse for their own ends.
To become—in other words—creative fuel for the nation.
Content available from the Creative Archive
is subject to a specifically designed licence that allows only
non-commercial use of the downloaded material, subject to some
restrictions. The basic rules are:
— Creative Archive content is for personal
and not-for-profit educational use. Users are not permitted to
sell or profit financially in any way from its use.
— Anything created using Creative Archive
content must be licensed to others under the same terms.
— Anything created from Creative Archive
content must credit those who have contributed to it.
— Creative Archive content cannot be
used to promote political, charitable or other campaigning purposes,
and must not be used in a defamatory way.
— Content is made available for use
within the UK.
The current trial also requires users to register
and accept the terms of the licence before they can download clips.
For added security, the archive content released under the Creative
Archive licence will use limited Digital Rights Management. The
current trial is testing a patented video watermarking technology
that embeds a virtual barcode into the video clips. This barcode
can be read through video editing and format changes so that any
video sequence can be traced back to its source. This will not
interfere with legitimate creative users, but it will assist the
BBC in the event that any use is made of the material in breach
of the licence terms.
Content is licensed into the Creative Archive
only where permission has been granted by all the relevant rights
holders. This process is a complex one, and for the current trial
requires material to be cleared on a case-by-case basis. The results
of the trial will be tabled in future discussions with rights
holders, and we hope that this will lead to more standard agreements
and arrangements. The Creative Archive should be understood for
what it is—a pioneering concept that will require time,
confidence and consensus to fully implement. Meanwhile, the BBC
has limited itself to a selected set of content released to test
the proposition. As part of the joint arrangement with the other
members of the Creative Archive Licence Group, nearly 200 hours
of content from all of the partners were available for downloading.
THE PUBLIC
VALUE TEST
The BBC believes that the various proposals
mentioned here will greatly enhance value, convenience and choice
for its licence fee payers. But the ability to deliver them will
depend on both having the necessary level of funding (on demand
services are a key part of the BBC's licence fee proposals) and
on the appropriate regulatory approvals.
The White Paper makes clear that all new services
and significant changes to existing services will be subject to
a Public Value Test, which will be applied by the BBC Trust and
involve weighing up the "public value" of the proposed
change against its impact on the market.
The Public Value Test will involve consultation
with stakeholders, and a market impact assessment conducted by
Ofcom, and should comprise an assessment of the following factors:
— the value licence fee payers would
place on the service;
— the value the service delivers to
society as a whole through its contribution to the BBC's public
purposes and priorities; and
— the value for money delivered by
the service—including a consideration of whether licence
fee payers might benefit from a corresponding reduction in the
licence fee.
CONCLUSION
The tremendous opportunities that technological
change presents for UK consumers and businesses will be maximised
through the industry as a whole taking an innovative and flexible
approach towards rights management. The threat to rights-holders
of the ease with which their content can be copied at high-quality
is offset by the opportunity to develop real-time, low cost distribution
channels.
The BBC is determined to play its part in developing
partnerships based on innovative business models which will benefit
its licence-fee payers, its partners and the UK creative industries
as a whole.
27 March 2006
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