Examination of Witness (Questions 352-359)
Mr Jim Murray
6 NOVEMBER 2006
Q352Chairman: Good afternoon, Mr Murray. Many
thanks for agreeing to meet with us. We are very grateful to you.
We read the submission you made to the Commission which has been
very helpful to us. We have a number of questions we would like
to ask you although, as always, we have far too little time but
we will try to get through what we can. We would like to discuss
the scope of the proposal, some issues about minimum content rules,
the Country of Origin Principle and the question of self-regulation,
and if we have time we would like briefly to talk about some aspects
of impact assessment. I do not know if there is anything you would
like to say by way of introduction.
Mr Murray: No, not at this stage.
Q353 Lord Haskel: On the question
of scope, the proposal attempts to bring the emerging media platforms,
especially the internet, under the existing regulatory framework.
In your submission you talk about "the new threats".
We just wondered what you meant by "the new threats".
Mr Murray: Oh, dear, I did not think it would
come over as quite so apocalyptic. One reason why the audiovisual
industry is looking for an updating of the previous Television
Without Frontiers Directive is precisely that they see advertising
and commercial communication migrating from the old traditional
media into new media. I am not quite sure that that is as large
a threat to them as they suppose. Probably the multiplication
of channels is much more of a threat at this stage than the migration
to new media, but taking account of the fact that there is a migration
of advertising and commercial communication to new media, since
we have always accepted (although one may argue about the extent
of it) the need for regulation of commercial communication and
advertising, it makes sense, although it is by no means easy,
to try to follow commercial communication wherever it goes in
terms of regulation. It is not a question of trying to regulate
what somebody does in their mythical garage or something like
that, but if we take a large company, let us say Procter &
Gamble, and regulate how they advertise on television, how they
advertise in the printed media, it would surely be sensible that
we should try to extend the same principles to how they advertise
on-line in the non-linear media. I do not say it is easy but the
principle is that we cannot say, "Let us stop regulating
now because it has all got too difficult".
Q354 Chairman: If I may follow that
up, you said that if Procter & Gamble advertise on television
that is regulated, but when you talk about them advertising on-line
do you mean anything on the internet should be regulated in advertising?
That would appear to be what you said.
Mr Murray: I think one has to start with maintaining
the principle that commercial communication, advertising, is defined
as the making of a representation and so on in order to promote
products. We try to do this for any advertiser, at least within
the jurisdiction. It gets more complicated when the advertiser
is outside the jurisdiction. If somebody publishes a false trade
description on-line, the fact that it is on-line does not in itself
prevent action under the Trade Descriptions Act in the UK or the
equivalent legislation in other countries. Yes, advertising, commercial
communication, should be regulated wherever it is done to the
extent that we can. As I say, clearly new challenges arise on-line
but that is not a reason for saying let us just stop at the linear
media.
Q355 Chairman: We will come later
to quite what it is you would like to regulate.
Mr Murray: Oh, indeed. That, of course, is different.
You cannot simply apply the same rules. You cannot apply the quantitative
rules, for example.
Q356 Chairman: Indeed. Your starting
position on any of the elements of what is to be regulated would
be in principle that your organisation would wish to extend whatever
those regulations are, if it were possible to do it practically,
to anything on the internet as well as on conventional television?
Mr Murray: Yes. Arguably they already apply
because even under the Misleading Advertising Directive advertising
is defined as the making of a representation in any form in order
to promote the supply of goods and services. One may say that
already in itself it is not a shocking thing to suggest that the
internet should be regulated. One uses the phrase "the internet
should be regulated", and of course this conjures up all
kinds of problems but the fact of the matter is that the internet
is there, it is used as an advertising medium and it is used as
any advertising medium may be used, by fraudsters and people of
evil intent as well as by the vast majority of reputable advertisers.
Chairman: You are beginning to talk here
about a specific activity to be regulated which we are going to
come to in a minute.
Q357 Lord Haskel: You spoke about
the multiplication of channels as being a threat right at the
very beginning, but of course to the consumer it means more choice.
Mr Murray: Yes, indeed, this is the case, but
if one looks at the fate of an individual channel, it is under
revenue pressure from a variety of sources. The usual thing the
industry will say is that it is all due to the internet and therefore
if we want to preserve any kind of traditional television we must
allow more revenue sources, more advertising. We are questioning
that and we are saying that first of all the threat to the revenue
of the business or any individual station is not necessarily coming
all from the internet. I am sorry: it is, of course, coming from
the internet to a degree but it is also coming from the sheer
multiplicity of channels. I would like at some stage to say something
about the overall place of advertising and commercial communication
in our culture, though I will not do so now. What we have is a
situation in which the revenue has been spread more thinly over
a larger number of channels. People are saying, "We cannot
get enough revenue from advertising to keep our station so let
us have more advertising", and it becomes a kind of escalating
circle as things go up and up. In 10 years' time there will be
some other problems and they will say, "We need some other
source of revenue and therefore we need more advertising".
Underlying everything I say is let us not look just at this particular
step but let us look at it as part of a wider trend.
Q358 Lord Haskel: But presumably
if you increase the advertising the point will come where people
will switch off or switch to another channel. It is self-defeating
in a way, is it not?
Mr Murray: It is, and that is in fact what is
happening in this situation. As people are switching off and are
getting tired of the more direct advertising the industry is looking
for forms of indirect advertising, such as product listing, for
example, which we would characterise as hidden advertising, and
the other forms via marketing and so on, and all the time looking
to erode the distinction which used to exist, at least in principle,
between advertising and programme or editorial content. Again,
therefore, we have a situation where things are in a kind of vicious
circle. The more people turn off the more advertising people want
to throw at them one way or another and, of course, it goes on
like that.
Q359 Chairman: Does that mean that
in this much more competitive and varied world that has moved
on since television was first regulated you would accept the gradual
demise of free television in that sense? In other words, if people
want to have television that is relatively free of advertisements
and so on they will have to pay for it? In other words, what model
do you have in mind, given that this whole thing started years
ago when there was very little choice in television, they were
virtually monopolies, and that was the origin of it? It was not
that anybody sat there and thought about this very competitive,
multi-choice world. It was, "There is no choice; therefore,
regulate because they are monopolies".
Mr Murray: Indeed.
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