Examination of Witnesses (Questions 320
- 339)
TUESDAY 13 JUNE 2006
BBC
Q320 Chairman: Are you aware that
at a time when the creative industries are struggling to get across
the message to people that they should pay for content and that
a large amount of the content which is available free is actually
illegal, that there is a problem for the BBC to suddenly come
into the market and make available huge amounts of material for
nothing? Surely, that slightly undermines the message that they
are trying to get across that people should be responsible and
pay for the material?
Mr Highfield: I think it is a
win/win. I think it is more complicated than that. If we create
or help create a market for legitimate downloads of content, which
I think we absolutely did on the IMP trial which offered BBC programmes
for seven days and on the creative archive, then we can use our
presence firstly to educate people but we are also creating a
market in the first place that the secondary commercial windows
can then exploit. That was one of the conclusions from the Graf
Review, that we had helped create markets and in that case he
said there were as many as two million people online for the first
time. What we were doing, for example, on the IMP trial was offering
programmes legitimately to download. We were the first broadcaster
in the world to offer legitimate peer-to-peer downloads. Up until
then it had been the preserve of the illegal old NAPSTERs and
so on of this world, illegal sites. We have created now a different
language, a language that says peer-to-peer downloading, ripping
and burning can be a legal legitimate framework. I think it is
something we can do in collaboration with the industry.
Ms Thomson: It is important to
say that we have every interest in this ourselves. We are, after
all, major rights' holders and one of the things that made us
decide we have got to try to move a bit quicker on things like
the iPlay proposal was because Dr Who appeared on an illegal
site a week before the first broadcast was transmitted. The other
thing that is also worth saying is that the proposals around the
Creative Archive and the Open Archive are again things which we
have piloted at the moment but our proposals for services are
likely to need a public value test and will have to go through
that. So any impact on the market from that will be weighed up
at that point.
Q321 Helen Southworth: In your evidence
you referred to the basic rules around copyright and rights. That
sounded really good in the evidence, it sounded really clear and
simple—basic, simple rules—but what are you actually
doing to make those basic rules very simple and clear for consumers,
particularly for young consumers who are moving into a very different
world that is very open?
Mr Highfield: That kind of media
literacy is really important and across a range of our sites whenever
we offer content for download, we do make it very clear that.
If you try it and you go to our Creative Archive web sites, then
you get these very clear messages that it is non-commercial, that
you must share, that you must credit it, that you must not use
it for commercial use, that it is not allowed to be used for endorsement
and so on. As with everything else, if somebody starts selling
videos of our content in a street market in the East End we will
use legal redress. So I think we are playing our role in very
much trying to educate people to do the right thing, if you like.
Q322 Alan Keen: If under torture
you were forced to admit that your new media activities did have
a detrimental effect on the private providers, where would you
start?
Mr Highfield: The interesting
thing about the Philip Graf review is that he did an extremely
thorough review and obviously with his background in Trinity Mirror
understood and took on board a lot of the concerns of the regional
paper groups and he came to the conclusion that there was no strong
evidence that we have had a negative market impact. He did however
say but the market is fast changing and we should have a precautionary
approach to new developments. I completely agree with him, coming
from a commercial background myself. The feeling that somehow
the BBC has as part of its game plan a predatory approach to try
to negatively impact the market is just not the case. Where Philip
Graf made some quite reasonable comments on some of our web sites
not being sufficiently distinctive—Fantasy Football was
one of them—we have moved to close them down. On the Where
I Live site, I am acutely aware of the regional newspapers' issues
and I think we have gone a long way in making sure we link much
more closely to the regional news. We have done some very interesting
collaborative projects with them and I think that is an area where
we can do a lot more. The idea of us as a stand-alone gatekeeper
is over. We should be a lot more porous in working with the players.
If I can give you an example of that. This year's One Big Weekend
that Radio One did up in Dundee, I reckon two years ago we would
have done it all on our own web site, but this year all the photos
that people sent in from the gig were posted on to Flickr. We
have no intention of becoming a Flickr ourselves. They were posted
on to Flickr and we linked through to Flickr. We helped editorialise
those photos, break them down into all the different bands and
days and so on, but we worked in a collaborative project with
Flickr. Likewise with MySpace, one thing to get very clear is
that we have no intention of trying to become a MySpace or a Flickr
or a Google. We want to work with them and we do work extremely
collaboratively with these companies.
Q323 Alan Keen: I am ashamed to say
that I have forgotten whether it was Tchaikovsky or Beethoven
where you had a week—
Mr Highfield: It was Beethoven.
Q324 Alan Keen: Where you came here
and played some music in here during that week. What happened
within the BBC when all the criticism came that you were really
damaging the sales of music?
Mr Highfield: We looked into that
and we take it on chin that we did not think this was going to
be that popular nor in fact did the industry. We talked to some
of the players in the industry before doing it and nobody seemed
to be particularly bothered or interested. We thought, "Oh
well, we will try it." Everyone was taken aback by the success
of the Beethoven downloads, offering people seven days post the
TX of each of the symphonies to download. This was not forever,
it was only available for seven days after transmission. For the
several million or certainly over a million people who accessed
this, there are some interesting stats. One was that pretty much
half of them said that that had increased their desire to listen
to more classical music. A lot of them had never listened to classical
music before but thought they would give it a go because it was
downloadable and they could play it on their portable devices.
What was really interesting, though, is that the sale of Beethoven
CDs afterwards went through the roof. We are not going to do this
again without thorough consultation with the industry, but I think
you can see the model there of something that we do to try out
could create a new market which again is a win/win. Our audiences
loved it and it created a whole new commercial CD market in the
window after that.
Q325 Alan Keen: Why have you not
done it again then if it was so good?
Ms Thomson: We have done similar
things. At Easter we had a Bach season and we offered some downloading
there but we did that one, John will be pleased to hear, in full
co-operation with the BPI and we were offering smaller bits of
music to do it. We have been working very closely now with the
BPI on how we develop this. One of the revelations of new technology
is the wide range of interests of these new downloading and on-demand
things, the wide range of people that are attracted by it. We
all assumed that it was going to be teenagers and that anyone
with other interests could not possibly master the technology
or something. It is just not true. The radio player experience
and the iPod trial we have been doing in radio shows that there
is enormous interest. The second most popular download is The
Archers but the Today interview is also very popular, and
this process is offering not just rock music fans to hear other
music, possibly illegally, but a whole range of access to core
public service content.
Q326 Paul Farrelly: Could I take
another specific example because it is very difficult without
taking specific examples not to get lost in generalities in this
area as to how you may or may not affect the commercial sector.
News over mobile; where does the BBC stand at the moment in the
news over mobile service?
Mr Highfield: The BBC has been
providing its news services through mobile devices for quite a
while now. We believe that it is part of the essential public
service of delivering news and information. We realised that if
our audience increasingly wished to consume outside the six and
10 o'clock bulletin, then we had better provide it for them, and
that has led us to the provision of services through interactive
TV, through BBCi and online and on mobile. I think it is worth
saying that the service licence is not just one service licence
for the whole of BBC.co.uk. The service licence for BBC News 24
includes their obligations across different media, likewise Radio
One. Online is picked up in any number of the BBC's service licences.
The overall commitments, for example our commitment to having
a 25% indie quota, is then picked up on the BBC.co.uk service
licence. To your point, I think there is something very valid
in there that says because we were not aware of where the mobile
market was going to go because we really did take on board ITN
and others' concerns and we have taken a very precautionary approach
to developing our services over mobile. The funny thing is we
get criticised for not providing more of our content over mobile
and for not having a coherent strategy for why have we not put
BBC1 on to the various mobile transmitters, whether it is 3G or
DMP or DDBH or the other emerging standards for television over
mobile. That is because we recognise with mobile that we should
have a very clear idea of the public value that we create. Up
to now a lot of these tiny little screens on mobile have not enabled
the BBC to get its distinctive public values across versus other
services. Now that you can get full-streamed video on mobile devices,
we can look at how we provide our public services.
Paul Farrelly: Sadly, I personally have
not seen any of that because my all-singing, all-dancing mobile
was stolen on the train and I am back to a bog standard old Nokia.
Chairman: I do not think we can help
you on that.
Q327 Paul Farrelly: What I am trying
to get at is you mentioned ITN; how would you approach the pricing
of those services? I am trying to get a feel for how ITN could
possibly compete with its economics with a corporation as big
as the BBC.
Ms Thomson: I think we should
face up to the fact that there is an issue here and there is no
point in pretending there is not. What Ashley was saying about
the pressure on us to provide services to mobile is just worth
pausing on because it is a complicated market. There are content
providers we compete for but obviously there are people running
these platforms who are desperate for BBC content because it is
quality content like that ours that drives their business, so
they could be more successful if we were there.
Q328 Paul Farrelly: Sure.
Ms Thomson: But on ITN the first
of our public purposes is citizenship and central to that—although
it is not exclusively about news—is news. Licence payers
have paid for news, which is, as Nigel Evans was kind enough to
say, available on an online site and is excellent. To re-charge
licence fee payers for it because they happen to want to access
it via mobile phone is a very difficult thing for us to do. To
pretend that it makes ITN's life any easier, we cannot pretend
that it has absolutely no effect.
Q329 Paul Farrelly: ITN of course
is a high-quality news provider so the issue of quality is not
an issue with ITN.
Ms Thomson: Absolutely.
Q330 Paul Farrelly: I am just trying
to get a grip in my mind vis-a"-vis the mobile operator who
can transmit the BBC content on a mobile, how ITN could possibly
compete with BBC, which is why I asked what your approach to pricing
is because you do not need to say to mobile telephone operators
that we will beat any ITN price because they will have it in their
own minds, but you could beat any ITN price.
Ms Thomson: Our approach in the
UK to pricing, to be clear, is that we cannot price for it because
we are barred by the Charter from making a profit and from doing
commercial services on our core content.
Mr Highfield: The provision of
news over the web and by extension to mobile devices, given that
most mobile devices now have open web access on them, is a free
service. No-one is able to charge for the basic provision of a
news service. Highly tailored news service like some of the content
available on FT.com is a subscription service and is not something
that we would offer. ITN like most web sites is able to earn its
revenue through advertising and that is where I think the future
lies for them.
Q331 Paul Farrelly: There is clearly
an issue here.
Ms Thomson: I am not going to
sit here and pretend there is not an issue but obviously advertising—
Q332 Chairman: You referred to the
Graf Review and the online content. I understand you accepted
that there should be an independent production quota applying
to your online content. How are you getting on with that?
Mr Highfield: Pretty good. We
are on target to meet the 25% quota by the end of the financial
year in April next year.
Q333 Chairman: Will you extend it
so that the opportunities which it offers the independent production
sector through the WOCC ( window of creative competition) will
also apply to online content?
Mr Highfield: Which particular
elements?
Q334 Chairman: The next 25% which
is available for competition between in-house production and independent
production?
Mr Highfield: It is something
that has not really come up for debate yet given we are still
trying to get up to 25% of the quota. It is not a live debate.
Ms Thomson: The Governors will
be reporting on progress against that in the Annual Report.
Mr Highfield: In December.
Q335 Chairman: Oh good, we will ask
them about it. Service licences and public value tests; you have
referred several times to how new BBC services will be subject
to the public value test. Are each specific one of your new online
services, such as the Creative Archive, the Interactive Media
Player and mobiles, going to be subject to a separate public value
test and separate service licence?
Ms Thomson: There is a definition
of service written in the White Paper which will be repeated in
either the Charter or the Agreement, I cannot remember which,
about what is a service because that is one of the very difficult
issues with this. Service is basically defined in there as something
which commissions and aggregates content which audiences recognise
as a separate service as well. So, for example, the IMP MyPlayer
proposal is going to go through a public value test and is a new
service.
Q336 Chairman: It will have its own
service licence, will it?
Ms Thomson: And it will have its
own service licence. It is up to the Trust but we have done the
initial work within the management on the public value assessment,
and although we are not obliged to do that because we are still
under the old Charter, we are going to do that as a gesture of
good faith about how we are proposing to work in the future.
Q337 Chairman: What about the Creative
Archive?
Ms Thomson: We would expect the
Creative Archive to have to go through a public value test and
the local news service.
Q338 Chairman: Will the Creative
Archive have its own service licence?
Mr Highfield: Again it is a matter
for the Trust. I think for the Creative Archive and the Open Archive
together as a single archive service, I would imagine there will
be a separate service licence, but it is a matter for the Trust.
Q339 Chairman: You will have heard
from previous witnesses most of the concern revolves around whether
or not there is going to be sufficiently rigorous regulation of
these new services. You would perhaps go quite a long way to meeting
that concern if you could reassure people that there will be separate
service licences and separate market impact assessments before
you proceed down any of these routes.
Ms Thomson: As you will understand,
under the new governance arrangements this is not a matter primarily
for me and Ashley any more but for the Trust. From where we sit
it certainly feels rigorous, having just done a public value assessment
on MyPlayer. I would like to say because there is one misconception
about local television news, we are currently doing a pilot on
that. We have not yet decided and the Trust and the Governors
have not yet decided whether that would be done as one proposal
with one market impact assessment or whether it would be done
as a number because there obviously is an interesting issue about
how you define the market for that. I was slightly surprised that
there was confusion because we have had long seminars and discussions
now with the Newspaper Society about the development of television
news and that is one of the things that I think we made clear.
We are not presupposing the scope. It is in the BBC's interests
that this is a rigorous process which has public confidence. If
we cannot make this work we will kill the BBC long term because
we have got to be able to operate in a market cognisant of the
impact on the market. I think it will be uncomfortable for us
at the management level in the next year or two because it will
be a bit bloody, but it probably has to be.
Chairman: We have no more questions.
Thank you very much.
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