Examination of Witnesses (Question Numbers
7 JULY 2009
Q120 Mr Evans: What would you do
about that? Is the BBC the number one bogeyman for you?
Mr Newell: There are a number
of bogeymen. Ed is better at bogeymen than I am but, yes, the
BBC is a big, big, powerful beast in the sense that its total
licence fee income is greater than the whole revenue of the regional
press put together and we in that sense are a fragmented industry
trying to compete against a national institution.
Mr Curran: My career spans about
40 years and, in Northern Ireland, the BBC of course has been
particularly strong as it is in Britain. I do regard it very much,
with the benefit of hindsight and going forward, as being the
bogeyman. I think that if you were to look at the history of regional
newspapers over the last 30 or 40 years, the decline in circulation
of big regional newspapers, big city regional newspapers, I think
you can actually set the decline against the development of regional
radio and television, not just the BBC but principally the BBC.
I see the BBCand I have seen it all the way through my
career, even though I have appeared on itas being a competitor
and not being complementary. Many people within the BBC seem to
think that they are complementary to us. I do not see any evidence
of that. I have seen many occasions for example when newspapers
have produced exclusives where no credit has been given to them
where information that is in newspapers has been pinched. Going
forward from radio and television, we now have the biggest challenge
of all which is the Internet. In the 1990s when the BBC began
for example to develop its Internet sites for the first time they
went round the principal regional newspapers in Northern Ireland
and pinched some of the best journalists at higher salaries, put
them into an Internet department and attracted them in that way.
I think that is grossly unfair as it never was a level playing
field. We for example run one of Ireland's biggest Internet sites.
I think that at one time the Irish Times in Dublin and
the Belfast Telegraph would have been the biggest Internet
sites and still are large. We have huge hits per week and unique
users. There is no way that we can compete against the largesse
of the BBC. I may say that the same thing applies to its regional
journalism as distinct from national journalism. I would suggest
that for example, in a region like Northern Ireland, the BBC employs
more journalists and has more resources than all of the three
daily regional newspapers put together in Belfast and probably
a good number of the weekly papers added on as well, and I think
that is something that is almost impossible to compete against.
Q121 Mr Evans: So, over the years,
the BBC has had its hand on your neck and it has slowly been closing
Mr Curran: Yes. The final tourniquet,
if I may use the phrase, is really the Internet in the sense that
we are all struggling to find some means of monetising the Internet
and, even if we all collectively got together tomorrow morning,
Rupert Murdoch, Associated Newspapers, Independent News and Media,
and said, "We are all going to charge for the Internet",
we would be undermined by the BBC.
Q122 Mr Evans: We know the problem,
what is the solution?
Mr Curran: My personal view is
that I think the BBC needs to be restricted in the way it expands,
particularly in the regions. All of us have a huge appreciation
for the BBC nationally, for its international service and its
national service throughout our livesthe model "nation
shall speak peace unto nation", all of that and everything.
However, since the 1960s, I think that its expansion in the regions
has been detrimental to the overall regional media and is inevitably
leading to journalists and newspapers being diminished, either
journalists losing their jobs or newspapers closing eventually.
Q123 Alan Keen: I can go back even
longer as a consumer of news. I used to work for Middlesbrough
Football Club; I used to be in London every Saturday; I remember
watching one club before we played the following week or two weeks
later. Much of my excitement in football was driving out on the
Great West Road and watching the Evening News and the Evening
Standard vehicles trying to get newspapers to the local users
and people would be standing outside waiting to look at the football
results and the league tables. That was really exciting. Nowadays
it is absolutely nothing compared with what it used to be. It
is a change in technology; it is nothing to do with the BBC being
better funded. Why would anybody stand outside a newsagent shop
on a Saturday evening to get the football results and league table
results when you can get on your iPhone or whatever and get the
up-to-date league tables and results with the advance of technology?
I have to say that I have sat on this Committee since 1997 and
we have had people from the private sector in broadcasting and
print saying, "It is terrible; the BBC shouldn't be allowed
to do the Internet; they shouldn't put it on the website; they
shouldn't be allowed to do this; they are stopping our competition".
If people had their way, we would not be able to get this wonderful
service from the BBC. It is nothing to do with BBC funding. Be
honest. Argue with me if you want to.
Mr Curran: I would suggest that
if in fact what was happening in the media industry with what
is a pseudo-nationalised industry, namely the BBC, was reflected
in any other sector of our society, there would probably be a
hue and cry. In reality, we know for example at the moment how
important private industry is and if any other area of it, we
had a taxpayer-funded organisation that was basically going to
a point where it was actually damaging the future of that private
industry, I think there would be questions raised all over the
Q124 Alan Keen: It is the technology
that has changed. Print media has to come to an end. I also go
back a long time and I have photos of me with my mother and father
walking down the prom at Scarborough with newspapers sticking
out of our pockets. I used to go and buy a newspaper every two
hours to get the Yorkshire cricket scores. It is the technology
that has changed. My local newspapersand they are both
known nationallydo not even produce an ongoing website.
They are only just beginning to produce an ongoing website day
by day. If they had their choice, they would still be just producing
a newspaper once a week. It is the technology. You are going to
have to go over to electronic and you might as well say that the
print media is going to finish altogether and I will be sad because
I have lived my whole life loving local papers.
Mr Newell: I do not think we take
that degree of pessimism really. We think that the future is a
combination of print products and website products. The problem
about the BBC is that the BBC crowds out our ability to make our
website offering financially successful. Our website service is
there and it is changing fast. There are now 1,200 websites run
by regional and local newspapers of varying degrees of expertise,
but the degree of expertise is increasing. Some of the issues
that you discussed earlier this morning with the Press Association
will actually hopefully accelerate that and the pilots that were
referred to in terms of Digital Britain and all the rest of it
will help the journey, but there are things on the journey that
make things difficult. The BBC is one of those things. It may
be interesting to hear from Geraldine whose Kent Messenger Group
is a company that actually concentrates on Kent, in a way that
does cover not only newspapers but other media.
Ms Allinson: We are a company
that has newspapers, radio stations and websites primarily but
we do have mobile magazines and things like that, but we do concentrate
on Kent. We are passionate about Kent and that is the area we
concentrate on. We have been going through change really for the
last 10 years when we decided that the future was not going to
be just print media and that is why we invested heavily in radio
and online. We have been doing video news on our website now for
three years. When we started doing it, it was laughable because
we only had still pictures and a person would be doing the presentation
and we would pan in and pan out of still pictures. We have come
on leaps and bounds since then. We have moving footage. All our
journalists are being trained in broadcast journalism and video,
likewise the commercial departments. We have partnered with Kent
University on a new journalism course they are doing which is
going to produce journalists who have a degree across all types
of media and we offer work placements with them for all students.
So, we are really trying to approach this; we believe the future
is multimedia. When it comes to the BBC, we do have a big competitor.
They do have a Kent BBC news website which mirrors their radio
station. We compete with them in radio obviously; we have commercial
radio; they have the BBC Kent radio. The interesting thing for
me is that they approach the country, I believe, as if it were
the same across the country. I believe that we do need to have
very good journalism at a local level and, if there is market
failure, I completely understand why we may expect the BBC to
go in there and actually provide that service. It would make perfect
sense to me for the country to be able to have access wherever
people are to a very good local journalism service. When you ask
the BBC about that, they are only interested in producing the
same thing across the whole of the nation and I find that quite
Q125 Alan Keen: If I lived in Kent,
I would rather go to you than to the BBC. Is Kent Messenger Group
still family run?
Ms Allinson: Yes, it is.
Q126 Alan Keen: There must be still
a lot of pride in it.
Ms Allinson: Huge.
Q127 Alan Keen: With the national
groups of newspapers, there cannot be the same pride as there
is around a family-run business. Can you contrast the Kent Messenger
with the newspapers owned by a national who are really, apart
from a few owners, interested in money?
Ms Allinson: It is a really difficult
thing to quantify. My shareholders nearly all live in Kent and
they absolutely are committed to the company and what it is able
to do and the activities that the company have. I think you find
that in the national companies like Northcliffeand I worked
in Northcliffethere is also local pride with all the people
who work in those titles. I do not think that there is any difference
with regard to the people who work in those titles and actually
what they are delivering to the local communities. I do not think
that that is different. Maybe with the commitment from the shareholders
when it comes to the returns they expect from their investment,
that is different and maybe the big groups are driven differently
to my company with regard to that. We have always thought that
10% profit to turnover would sustain our independence but clearly,
when we face situations like we are facing now, if I am making
a smaller profit when we go into a decline like we have, I have
bigger problems to get back to profitability, which is what I
Q128 Janet Anderson: May I touch
on something which I think is a very important part of this discussion
and that is the protection of creative intellectual property rights
because essentially the BBC have this huge public subsidy, they
lift a lot of your creative content and use it to cross-advertise
their different services and pay absolutely nothing for it. You
talked earlier about there not being a model that is useable for
monetising your online services, so what is the answer to this
because it seems almost insufferable because, if you try and monetise
and the BBC continues to provide everything for nothing because
they have this huge public subsidy, what is the solution?
Mr Pelosi: I think `twas ever
thus. Our local journalists obviously have access and do gather
a lot of content and a lot of unique content which is published
daily. I did not know that in Northern Ireland the BBC had more
journalists than the local press. If you take all of the areas
that we cover, we will have far more journalists in our communities
than the BBC has, but they can buy a copy of our newspaper and
they can then rework the news content or just republish the news
content online and it is the same with local radio. Local radio
employs very few journalistic resources. Again, they will get
their news from local newspapers. That is not to say that they
do not get scoops as well, of course they will get the odd scoop,
but, if we are talking 312 publishing days a year Monday to Saturday
52 weeks a year, then the vast bulk of local news is originated
by the local press. What can you do about it? I fear we are where
we are. I do not have the solution. Just as someone was asking
what is the solution to monetising these websites, I do not think
anybody has the solution at this stage, not just in the UK but
in the USA. With all the reading I do, it is very difficult to
see how we are going to resolve this.
Q129 Janet Anderson: But it is true
to say that this huge public subsidy that the BBC has puts you
in a very unfair disadvantage, is it not?
Mr Pelosi: Absolutely.
Q130 Janet Anderson: So, when the
BBC claim that they have to pay large salaries to people in order
to compete, that is just not true at all.
Mr Pelosi: They certainly have
to pay the salaries et cetera, et cetera, but of
course they do not have to generate any revenues so as to pay
for these services. They are publicly funded.
Mr Newell: I think that one of
the things that concerns us about the BBCand we must not
just talk about the BBC, I knowis that, in all their public
comments, they talk the language of partnership and yet the discussions
that they have had with the regional and local newspaper industry
have been fairly superficial and do not start off with the premise
we think they should. For a partnership to work, discussions should
start off from the premise of the BBC acknowledging how reliant
they are on regional and local newspapers as the premier news-gathering
resource in the country. I think that there has been too much
in the language talked by the BBC, that the BBC have content to
offer us whereas actually de facto we have the content that the
BBC use on a daily basis.
Q131 Mr Sanders: May I say that there
is a lot of BBC bashing here. The reality is that the BBC has
always been there. Is not the new threat now the new kid on the
block, something like Google, that takes your content, puts it
on the web and gets lots and lots of people looking at it?
Mr Newell: I think that some of
the issues that we have raised vis-a"-vis the BBC could apply
in the same way to Google and of course I think where government
can help is to ensure that there is a firm copyright regime that
allows a content owner to control the destiny of their content
Q132 Mr Sanders: How can the government
do that in a global environment?
Mr Newell: ... to ensure in addition
to that, an ability for the content owners to have dialogue with
Google. Ed earlier on referred to the interesting prospect of
all the national newspaper owners and regional newspaper owners
getting in a room together to decide how they should handle the
BBC. You could also say getting into a room together to try to
handle Google. The basic issue is that competition law does not
allow that to happen at the moment and there is a fundamental
imbalance, I think, that exists between a large, in the case of
the BBC, public corporation that is a unitary body and, in the
case of Google, a world-wide enormous company. To do business
with those institutions on your own, whether you are a Group or
an independent, whether you are Northcliffe or Kent Messenger,
is extremely difficult. To be able to do it by way of co-operation
and collaboration, existing competition law makes that hard. I
think that one of the disappointments we would have with the Digital
Britain report is that although on the whole it identifies the
right issues or a lot of the right issues, albeit it is pretty
light on Google, it does not with any degree of urgency suggest
what the solutions will be. Although the OFT review and the possibility
of Ofcom being involved will be helpful, I do not think that the
Report really addresses the fundamental issue that it is very
hard for newspaper companies, regardless of their size, to discuss
with one another rationalisation, whether it is a sharing of resources
in some areas and the swapping of titles in some areas. The geography
of individual newspaper groups in this country is a geography
of history. It is not a rational geography in terms of regional
areas. Kent Messenger is very unusual in that Kent is Kent. Northcliffe
titles are grouped around different areas within the country.
The competition regime, if it is to change quickly, should allow
those discussions to take place and also allow the industry to
act as one when it comes to having strategies towards Google or
Q133 Chairman: May I pursue this
because Google is clearly the bogeyman in the room, but there
seems to be a certain amount of confusion in your industry about
what you are complaining about. Is it a question in fact that
Google is taking content? So it is an intellectual property question
in that essentially Google is stealing your content and putting
it up for nothing and therefore diverting eyes from your sites?
Or is it that actually Google is taking advertising revenue? We
know that the majority of advertising online is spent on search
and by far the biggest provider of that is Google and that therefore
advertising is not being put onto your sites, instead it is being
taken over by Google?
Mr Newell: I think you are right
in characterising the position as one at the moment that individual
companies have different views on and different arrangements with
Google, but I think that what would unite the industry is the
importance of a strong copyright regime and the need in practice
using technology to make certain that individual companies are
in control of their content so that, if they do not want Google
to actually take their content, there are conventions and means
to prevent that happening.
Q134 Chairman: Surely you have to
have Google otherwise most people are not going to find your site.
People are not necessarily going to go directly to the Kent Messenger
Group site or the Northcliffe site, they are going to Google,
and actually Google is driving people to your sites.
Mr Newell: And, within that, the
way in which advertising revenue relates to that is extremely
important. I think the more general point that I am making is
that we need a strong copyright regime that works in practice
and we need to find a way, which I do not think the industry has
yet found, partly for the reasons I indicated because of competition
law, so that there can be more generic discussion with Google
about some of these issues.
Q135 Chairman: When you say stronger
intellectual property law, you are not suggesting that Google
should not be able to carry the first sentence of an article because
that actually is to your benefit and not to your detriment.
Mr Newell: I think that it should
be within the sovereignty of individual companies to decide whether
they want Google to be a vehicle that they use or not.
Q136 Chairman: I think the evidence
we received last week was that however much people did not necessarily
like Google, they accepted that they had to have Google if they
were going to get people to their websites.
Mr Newell: I think that would
be the view of the majority of companies, but I think that they
are in that position because of the sheer power of Google.
Q137 Chairman: Google has been immensely
successful and dominates search but there is not very much that
you can do about that. The advertising issue is one perhaps where
there is an imbalance and that may well be a competition issue.
Mr Pelosi: There is no doubt that
we need Google and the way in which we compile pages online are
such that they are search engine friendly so that when people
are searching for, say, "cricket scores in Cheltenham",
then they will go to our site first. Yes, we do need Google, but
Google has this aggregation service which of course means that
traffic eyeballs can stay on Google and scan the news without
coming to individual sites. Again, I suppose that we are where
we are now because how can you get a snapshot of news other than
through an aggregator but it is through an aggregator that we
are denied traffic because traffic will go to Google first to
look at Google News and then, as a result of an aggregator having
that traffic, then they have the primary opportunity to monetise
the eyeballs. Again, I think that we are in a very difficult situation
and it is rather difficult to see how we are going to find a solution
to this. We need Google for the search. As a result, we can have
Google News, which is an aggregated content, and, as a result,
they are going to get a lot of the eyeballs.
Q138 Chairman: But you can always
offer more than Google can in terms of depth of coverage and quality.
Mr Pelosi: Yes, absolutely, and
obviously we do. When somebody clicks onto that story, they click
through to our website but it is whether they stay on that website
or click back so that they can go on to the next story.
Q139 Chairman: I am left with the
impression that you see Google as being a serious threat in terms
of taking eyeballs and indeed revenue, but it is not immediately
obvious what we can do about it. Is that fair?
Mr Pelosi: Certainly I feel that
it is not obvious what we can do about it. We can stop Google
taking our contentI think you can just block their robotsbut,
if we do that, then we do not have access to the Google search
engine when someone keys in "cricket in Cheltenham"
because we want them to come to our sites.