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Memorandum submitted by the British Internet Publishers Alliance (BIPA)
The British Internet Publishers
PART 1 - OVERVIEW OF THE IMPACT OF THE COMMERCIAL OPERATIONS OF THE BBC ON BIPA MEMBERS
Although many of our members will be submitting evidence on an individual company basis BIPA welcomes this Inquiry and would be pleased to offer oral evidence to the Committee. Meanwhile our views can be summarized as follows.
1. It is difficult to investigate the commercial operations of the BBC in isolation of the BBC's publicly funded activities. This is because the BBC is using public money through licence fees and commercial revenues through BBC Worldwide's advertising and other commercial revenues to build a global web operation. 2. Through superior technology and marketing power they dominate the UK's online market. The licence fee supported BBC.co.uk domain is uninterrupted by adverts, promoted on their TV and radio platforms, constantly evolving and building huge audiences. They use the same technology to underpin their worldwide audience as their UK audience and then monetise it through advertising. 3. Such unparalleled resources, combined with unrivalled, privileged access to un-regulated cross-promotional opportunities, cross-subsidised access to content production and assets, combine to create unfair competition with the commercial media sector. 4. BBC advertising on global websites distorts competition with commercial web publishers and hampers their ability to compete in these markets. It also blurs the boundaries between licence fee-funded and commercial activity. (See Annexes 1 and 2). In addition, subscriptions revenues are also threatened when competing services from the BBC are launched free of charge which duplicate commercial offers. 5. Since 2006 when the BBC Trust rules superseded previous fair trade regulations, BBC Worldwide has expanded aggressively into areas unrelated to BBC content e.g. through development of certain 'passion sites' such as BBC Green. Licence fee money is being risked in ventures such as Lonely Planet, and the very presence of the BBC in the media acquisition market is in itself damaging to fair competition. 6. The BBC is exploiting its content at the expense of a dynamic, plural media sector (especially in the online arena), stifling innovation and closing off potential markets at a very early, vulnerable stage in their development. (See Annexes 3 and 4). 7. These activities which compete directly with the commercial sector are distractions to the BBC's core remit and thereby skewing their strategic priorities. 8. BBC Worldwide's original purpose, to exploit its content commercially to supplement the licence fee in transparent circumstances, giving the private sector a degree of certainty, is therefore severely compromised. 9. In 1994 the Sadler Inquiry examined the BBC's privileged use of its airwaves to promote its commercial print titles. It is obvious that on the internet the BBC has escaped from the recommended restrictions that flowed from the Sadler Inquiry. Many websites not only feed directly off existing BBC broadcasting resources but find life in the Specialist Magazine sector. 10. Through long term cross promotion and cross-platform benefit, the BBC now dominate in gardening and mainstream motoring by hooking their magazines directly to their ad free programming. Gardeners World reaches twice as many readers as the rest of the sector magazines combined, and Top Gear, reaches almost twice as many readers as the second place magazine, What Car? The BBC recently began an assault on the Football sector, using the same marketing approach of linking magazines to ad free programming through name association. Their recent launch, Match of the Day, which led to the closure of Shoot, has already reached 2nd position in the market, and is directly targeting Match magazine, rather than the age demographic of the TV programme. 11. Where 12. In the radio sector, BBC Worldwide competes head to head with commercial offers of live and on-demand audio, video and music content. Commercial radio stations are available also via the internet alongside radio station websites which offer a wide range of locally relevant and interactive information and features. Increasingly commercial companies are investing in video news as a crucial element of providing locally relevant services. The BBC's licence fee funded project for Local Video, combined with the usual cross-promotional activities and inevitable integration via the iPlayer will endanger the long term viability of the commercial radio sector if allowed to proceed as planned. 13. These highly intrusive connections and exploitations make nonsense of commercial publishers' and broadcasters' attempts to serve the same markets. There is a need for a new examination of the BBC's cross-promotion of its internet services, and the commercial use within them of material paid for by the Licence Fee. 14. Governance of BBC Worldwide is unacceptably weak. Anti-competitive effects are made worse by the lack of certainty about what the BBC can and will do. 15. Their behaviour breaks with past conventions of limiting BBC brand extension commercially to areas directly connected with the BBC's core programming and puts into question the governance of the BBC's commercial operations. 16. Therefore, we call upon the committee to recommend a full review by the BBC Trust with a view to setting clear, more stringent rules governing how BBC Worldwide can exploit the BBC's assets. There should be unambiguous boundaries for their online activity and between licence fee-funded and commercially funded activities and products. In order to ensure there is no cross subsidy from the public services to commercial BBC services separate accounts must be produced and clear terms on which transactions are conducted must be made available. This is essential and in line with EU policy which already requires transparency and fully separate accounts. All current activity should be reviewed against the new guidelines, not just new/planned activity, and any activity not meeting the new requirements closed down.
PART 2 - OVERVIEW OF THE BBC'S COMMERCIAL ACTIVITIES
As part of our submission we thought it would be useful to provide you with a comprehensive round-up of what the BBC does, how they do it and what others think about it. 1. BBC WORLDWIDE
BBC Worldwide digital strategy http://www.bbcworldwide.com/digitalmedia.htm "In 2008/09 Digital Media aims to enhance bbc.com significantly, launch Kangaroo, if approvals are granted, and continue to develop its content syndication business. Profits will again be impacted by investment costs." http://www.bbcworldwide.com/annualreviews/review2008/Digital_Media.aspx BBC plans ad-supported music service BBC Worldwide plans to launch an ad-supported online music service to give users access to the BBC's archive of music content... http://www.nma.co.uk/Articles/39381/BBC+Worldwide+plans+ad-supported+music+service.html
BBC Worldwide lays out digital plans Mr John Smith BBC Worldwide chief executive laid out a four-pronged strategy for BBC Worldwide: the BBC.com global portal; the commercial iPlayer; a series of digital franchises built around BBC brands; and partnerships with other organisations. He said that BBC Worldwide had a new target to double its £100m-a-year profit in the next three years and expected much of this growth to come from new digital businesses. Mr Smith added that criticism of the proposals to put advertising on BBC.com had "mostly come from newspapers who see it as a commercial threat".
He acknowledged that some BBC editorial staff had raised concerns about the impact of advertising on the corporation's reputation for editorial integrity and user experience. "I
don't agree. These will be carefully selected premium advertisers that will
come to the More BBC worldwide plans The third element of Worldwide's strategy will be a series of community websites based around BBC brands such as Top Gear and Good Food. Mr Smith said the BBC is now moving in the same direction as consumers. "There are really only two sorts of men in a revolution: those who cause them and those who profit from them," he added. "As we haven't caused the revolution, there's clearly one thing to do." http://eyedropper.co.uk/2007/03/06/fix-bayonets-bbc-worldwide-lays-out-digital-plans/
BBC buys Lonely Planet Lonely
Planet publishes around 500 titles that are widely used by backpackers. The
purchase fits in with BBC plans to grow online revenues and expand operations
in http://news.bbc.co.uk/1/hi/business/7021791.stm BBC buying Lonely Planet - MASSIVE online travel presence "BBC Worldwide moved quickly to bring clarity to Lonely Planet's online strategy and is investing significantly in this. The website will be among the largest sources of authored travel content on the web" http://www.bbcworldwide.com/annualreviews/review2008/global_brands.aspx
BBC Worldwide ramps up Digital Delivery Team with key hires
BBC.com ads are threat to other media's expansion, says Guardian digital chief The BBC's decision to put ads on its international website was an 'enormous state-funded intervention in the international news advertising market,'...."This is not our [The Guardian's] problem - this is everyone's problem.". Pete
Clifton, head of editorial development for multimedia journalism at the Guardian Media Group (former)
chairman Paul Myners challenged the
2. BBC ONLINE - IN GENERAL
This section is included to show that the boundary between Public Service and commercial operations is not as clear cut as it should be especially when analysing the commercial impact:
In
2008 BBC Trust said it would not give the website any more major investment unless it
could prove it was 'distinctive' and would not damage rivals.
Conservative MP Philip Davies, who sits on the culture, media and sport select committee, added: 'Basically the BBC with its massive licence fee does completely distort the market and makes it virtually impossible for its competitors.'
Page
views to
Staff
for BBC Journalism 12,585
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Annual report info 2007/2008
"We
are pleased that bbc.co.uk's reach grew by 16.2% over the year, with the site
attracting an average of 17.2 million weekly users from the On Page 27
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
"Our content achieved 19.2million unique users on the internet in March 2008, an increase of 53 per cent compared with March 2007. Weekly users are catching up fast with those for Local Radio."
"Our
partnership with BBC News to cover news at a local level for both our local
websites and the main BBC News site has been the bedrock of our service. Within
the partnership, stories in
"A
new partnership was also forged in 2007 with
On Page 27
"We are happy to note that BBC iPlayer, which launched over Christmas 2007, appears to be on target to meet usage forecasts. Content requests have more than doubled since its launch to 4.7 million a week by the end of March 2008."
3. BBC'S LOCAL DOMINANCE
English Regions on bbc.co.uk - BBC Local sites
44 BBC
Local websites across March
2008 monthly unique users: 19.181m
4. WORLD SERVICE - ONLINE
The BBC World Service's online sites attracted a record 259.6 million page impressions in March 2008, compared to 189.8 million in March 2007 - an increase of 37%. The international websites continued to respond to high information demand at times of crisis; the bbcurdu.com site reached over 1 million unique users in November 2007. Traffic to bbcbrasil.com more than doubled over the year, bringing the total weekly users to 1.4 million. The number of weekly unique users of the BBC World Service websites combined with the international news site in English averaged 13.2 million in March 2008, up 11% on the previous year.
Members of the BIPA:
Associated Northcliffe Digital, Bauer Media, Guardian Media Group, Independent News and Media (UK) Ltd, IPC Media, News International, Sky Interactive, Telegraph Media Group, RadioCentre, Trinity Mirror.
October 2008
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