Has Doctor Who discovered the future of the BBC?
(Regular readers of my own blog will be aware that I’m quite a Doctor Who fan. However, you can all rest assured that this post relates to Who only tangentially.)
In his 1995 article ‘What have we got to lose?‘ Douglas Adams made an interesting point about the BBC:
Television companies are not in the business of delivering television programs to their audience, they’re in the business of delivering audiences to their advertisers. (This is why the BBC has such a schizophrenic time – it’s actually in a different business from all its competitors)
One of the most interesting developments of the last couple of years has been the BBC’s realisation of this, and how it’s now making a fairly sizeable move to take advantage of it.
While there’s been a lot of excitement amongst technical minded types about the BBC’s launch of its Backstage developer metwork, the roots of this quiet revolution in the BBC are much more evident in the BBC Radio Player online service. For those of you who haven’t used it yet, as well as allowing you to listen live to most of the BBC’s radio output from anywhere in the world, it also allows you to listen to a whole selction of programmes from the last seven days. This isn’t just being able to pick up a news summary from the last hour, but the ability to listen to just about eveything broadcast on the BBC at a time suitable to the listener, be it music, news, drama or documentary.
Now, the BBC’s not the first organisation to broadcast radio over the internet, nor is it the first to broadcast an archive either, but it’s the first to do it on anything like this scale because it, unlike commercial broadcasters, doesn’t have to worry about making an income from this service. As this Wired article points out, the BBC doesn’t seek to. This is where Adams’ point starts to make sense – where for commercial broadcasters the content is just a means to an end, for the BBC, to revive an old Internet cliche, content is king. Innovations like Radio Player and the BBC’s involvement in Freeview are about maximising the number of people able to access BBC programming rather than maximizing the possible revenue from them.
And now we’re about to head into a real new frontier as the BBC are beginning a trial of a video-on-demand service, which really threatens to turn everything about TV on its head. Yes, I know you can achieve just about the same (maybe even higher quality) with BitTorrent and the like but you could listen to internet radio before the BBC launched their Radio Player, and what’s more this’ll be entirely legal.
As for what this might mean for the BBC and broadcasting in general in the future then take a look at what happened when the BBC’s feeds of their TV channels were ‘accidentally’ discovered a couple of weekends ago. This is how Doctor Who may have shown the future of the BBC for it just happened – coincidentally, I’m sure – that the weekend the feed tests were discovered and leaked to the internet was the same weekend that ‘Dalek’ got it’s premiere. At least hundreds, and probably thousands, of fans watched that stream without complications giving the BBC’s feed servers a very handy soak testing that they seem to have stood up to without a problem.
The point – as the BBC have discovered – is that broadcasting over the internet has a very different economics to regular broadcasting. Yes, there’s a marginal cost of extra bandwidth for each new internet viewer, but the cost of every viewer is the same no matter where in the world they happen to be. Previously, for the BBC to transmit to another country there was the expense of effectively setting up a new channel in that country. Now, they just have to enable them to access the feed and they can get it.
Of course, it’s not going to be as simple as just making the feeds available to anyone in the world. Beyond the legal and copyright issues, there’s the political issue of whether programs paid for by the licence fee should be avaiable for free to anyone anywhere but it does seem as if the will is there within the BBC to try and make it possible, while the Doctor may have shown them just what demand there is for it outside the UK.
Who knows? In years to come we in the UK might be able to enjoy an entirely free BBC, paid for by the subscriptions of people abroad.
The devil’s in your last (main) paragraph, Nick. Will the government continue to permit the licence fee to go on funding the BBC, when it (the BBC, not the government) is going to be spending some of that money on this sort of open-access activity (especially given that this ‘access’ is restricted to Internet users, who are not the majority in the country, even though they often behave as if they are). Or will Bliar’s friends at News International finally get their way and damage the BBC in the way we know they want to?
On the whole, the Beeb has been doing a bloody good job of disseminating information and entertainment (and, indeed, ‘infotainment’) via digital media, but this has been paid for partly by those without the means to access it (yes, I know we can all go to the library, but how many non-savvy people make it that far?).
The government has a difficult balancing act to perform, between keeping the BBC accountable to ALL licence-payers, and encouraging it to keep up with its competitors in terms of both content and the media used to propagate it. I’m not sure I trust Jowell & Co not to start tipping the scales in favour of Murdoch, in some way I can’t quite define at the moment.
A lot of bad policy arises from the assumption that everything has to fit a theoretical template. Yeah, the BBC is an anomaly. But it’s a good anomaly, and this is well shown by the absurdity of many proposals to change it – like “Comedy” John Whittingdale wanting to ban it from having a website, or whatever, or making it give its programmes away to competitors after the first series (Sky TV chief’s dramatically selfserving suggestion), or splitting the commissioning budget in two. Leave it alone.
The BBC’s net budget is tiny as a part of the overall budget. The BBC does have commercial profits and interests in numerous countries.
Yahoo bought Launchcast a few years ago, Launchcast offered free music via streaming, a sort of radio. Gradually Yahoo! is developing ways to make money from it…
the beeb may need to make a loss online for many years to build up a huge subscriber base, before it can then start making revenue from it. In the same way the Beeb can now make money through DVDs and videos of old programmes.
Maybe podcasting should be mentioned here: the idea that one can subscribe to a radio feed and listen to it at ones lesuire, without bothering with websites or the like. Its still in its infant stages and has a lot of ironing out to do, but technologies like this are the type of things the BBC can make the most out of. Whilst commercial broadcasters will be worrying about how to get revenues out of the system, the beeb can just stream away (and if they use bittorrent, which they don’t atm, they can do so at very little cost).
Actually, Nick, it’s refreshing to hear something optimistic (and realistic) about the future of the Beeb. And I think you’ve nailed it: there is a huge potential market for BBC content. Most of the world has ‘deregulated’ (read: vandalized) its national broadcast media down to the watery, occasionally poisonous, commercial soup level. It’s a cultural non-entity and completely unwatchable in the main (some sport aside, and occasional subscription hits like HBO). The question of course is how the BBC will harness this potential, and if they can keep the ‘rip it down’ voices quiet for long enough to show that its unique position can be turned to the benefit of Britons. I’d suggest that world-beating successes with children’s output in particular bode pretty well.
I’d like the current slavery based model the BBC uses to shove out its low quality nonsense abandoned.
If it’s so good people will willingly subscribe.
There’s no need to send people to jail for disagreeing with the Media elites opinions on what you should see.
In the last century we largely eradicated Slavery. Now it’s time to do the same with neo-slavery. Lets make Socialism history!
Rob, I see you have been down the posts on the front page of the site and basically entered two or three-sentence slogans on each, without any attempt at all to deal with or argue the contents of the post or subsequent contributor comments. If you have constructive points to make you are very welcome here. Otherwise, please stop.
I am being constructive, the current BBC is an abomination. It is funded by threatening people with jail.
The best way to reform it would be to leave it up to customers as to whether they chose to fund it.
I seek to demonstrate that collectivism is the replacement for slavery and where I see it I describe it as such.
Television companies are not in the business of delivering television programs to their audience, they’re in the business of delivering audiences to their advertisers.
This was probably true in the old BBC 1, 2, ITV, and C4 days, but it’s less true now. Sky, for example, makes over 2bn a year in subscriptions revenue, but only about 200mn a year in advertising revenue. That’s about the same order of magnitude as the revenue they get from cable wholesale and from SkyBet, so it’s really a very small factor in their profitability. It really is in Sky’s best interest to deliver quality content, so the Beeb is very much a competitor, which explains Murdoch’s desire to kill it.
I’m not sure about your logic there, Andrew. The only interest Sky has in making better programmes is if they can deliver consumers to advertisers in the way Nick describes. Their entire subscription revenue (and therefore a well targeted chunk of ad revenue) is locked in by Premiership football and a couple of minority sports, and as such is completely unaffected by the utter drivel on their other channels.
Their entire subscription revenue (and therefore a well targeted chunk of ad revenue) is locked in by Premiership football and a couple of minority sports
Not true. Over half the programming costs go on non-sports channels. I don’t have the breakdowns of various subscription packages (I assume they are confidential, but they may be on the Sky website), but Sky quite clearly are ten times more reliant on subscriptions to content than to advertising revenue. Hence, their business model is geared more to content than advertising. It wouldn’t matter if they took all advertising off air tomorrow – they would still be pulling in an extremely healthy revenue. Delivering content to customers is exactly what Sky is in the business of doing. Advertising is a nice sideline, but it isn’t the main event. If they make better content, they get an increase in subscriptions, and it will always be easier to get 1 new subscriber than it will to pull in the equivalent of 10 subscriber’s worth of advertising. Sky recognise this, which is why their own advertising has shifted away from the laddish sports’n’movies focus of 3-5 years ago, and onto the more rounded ‘What you want to watch’ focus of today.
In fact, if I were James Murdoch, and I had the balls of myself, I would cut all advertising on all of the main Sky channels just to spite the Beeb, and all the people who bring out the tired old ‘the license fee is worth the lack of adverts alone’ line.
I’m not sure how they are calculating programming costs, then. Almost nothing apart from Sports is originated by Sky. It’s all bought in, either in programme form for showing on e.g. Sky One (The Simpsons, which probably makes up the bulk of programming costs on that channel, and US mini-series like 24, ER, etc.) OR as programming packages (several Discovery channels, several MTV channels, three Disney channels, and so on). If your data is right, the subscription costs do not make any sense, as you can get almost whatever you want non-sports, non-movies wise for about a tenner. With free installation, you wouldn’t pay the cost of the engineer and equipment back in more than a year. Add sports and you jump to over 30 quid a month. Add movies to that and it’s another fiver or so. It’s clear from that where they know the value in their schedules lies.
My argument isn’t anyway that Sky aren’t reliant on subs. Of course they are – that’s why they defend their football with whatever it takes cost-wise to buy it. But if they want to deliver any extra money into the business it has to be programming designed to deliver consumers to advertisers in the manner described by Nick in his piece. Otherwise, it’s the annual price increase and no more.
The Simpsons, which probably makes up the bulk of programming costs on that channel
I doubt it – it’s made by Fox, so there is probably some cross-company subsidy. Some of that cost is no doubt offset by selling the terrestrial rights to Channel 4.
But this is beside the point – Sky One commissions a lot of new programming – it doesn’t just show repeats of tested American shows. It’s no different to the BBC commissioning third party programmes.
If your data is right, the subscription costs do not make any sense, as you can get almost whatever you want non-sports, non-movies wise for about a tenner.
Well, my data comes from the last interim financial report, so it’s accurate.
It’s clear from that where they know the value in their schedules lies.
Actually, I’d guess most people sign up for a premium package to benefit from free installation and get free hardware, then inertia means many don’t cancel the premium channels. But you’re probably right to some extent. Sky are attempting to diversify, but it’s a slow process – they built a brand on the back of sports, movies and repeats.
But if they want to deliver any extra money into the business it has to be programming designed to deliver consumers to advertisers in the manner described by Nick in his piece. Otherwise, it’s the annual price increase and no more.
The data simply doesn’t bear this out. It’s far easier, and far more profitable for Sky, to increase subscriber numbers than to increase advertising revenues. It is also less susceptible to cyclical downturns in the advertising industry. It is also easier to sell premium services like Sky+ or multiroom Sky than it is to increase advertising revenue. Your assertion is quite wrong. Sky even state that their corporate strategy is to grow subscriber numbers – they hope to reach 80% penetration of the UK and Ireland market as a target. From the AGM statement:
‘Programming remains at the heart of our business. We are an entertainment and information company above all else and we are always looking to acquire the best content for our subscribers. The last year has shown that we can continue to lead the industry in Britain, bringing new shows and popular movies to our flagship channels, growing the audiences for sport using new technology and providing the finest 24-hour news service in Europe.’
Emphasis mine.
I know that defending the BBC is axiomatic on the left, but to claim it is unique because it is the only broadcaster focussed on content is stretching the truth somewhat. Sure, Sky can’t make the kind of loss-leading programming that the Beeb can get away with, but to suggest they are in different businesses is fundamentally incorrect.
Andrew, you’ve got me all wrong if you think I’m having a pop at Sky. Above all (well, not quite all) I’m a football fan, a Liverpool fan in fact, and take my hat off to the Sky revolution in sports broadcasting. The BBC (and ITV) could have groped around for a century and not come up with coverage half as good. That achievement came partly from the ability and drive to understand consumers that the BBC doesn’t have, mostly because it doesn’t need to. (Interestingly, children’s programming seems to have worked completely and spectacularly in reverse.)
I’m still not convinced that the absolute value in Sky isn’t clear from the subscription pricing: 100+ channels for a tenner; 3 sports channels for another 26 quid. Call it inertia or whatever you like, the value of non-sports programming, a few fantastic buy-ins excepted, is almost zero, worse than Channel 5. Nor am I convinced that it’s ‘easier and more profitable’ to get new subscribers than to up-sell (e.g. Sky+, multiroom) and cross-sell (including ads, SkyBet, financial services, and so on) to existing ones. If true, that turns all standard business models upside down.
And I pretty much agree with your last para. It’s almost exactly what Nick said in the piece, in fact. The Beeb can do things other broadcasters can’t because it doesn’t have to turn a profit. It might just come across something that will enable it to self-finance in the future. Then maybe left and right will both have to re-think their axioms and start arguing about something else.
All I’m really saying is that Douglas Adams’ quote is BS. The Beeb is not unique, except in that it is almost totally shielded from commercial reality. Some consider that a good thing, some consider it a bad thing, for different reasons. My own view is that regressively taxing single mums on council estates to produce BBC4 for an upper middle class audience is morally wrong.
I’m still not convinced that the absolute value in Sky isn’t clear from the subscription pricing: 100+ channels for a tenner; 3 sports channels for another 26 quid.
Certainly, but that’s at least partly historical, and partly so that the basic Sky package is comparable with the license fee. It’s smart pricing. It still doesn’t mean that Sky’s focus is on delivering consumers to advertisers.
Call it inertia or whatever you like, the value of non-sports programming, a few fantastic buy-ins excepted, is almost zero, worse than Channel 5.
But it isn’t almost zero. It’s about equivalent to the license fee.
Nor am I convinced that it’s ‘easier and more profitable’ to get new subscribers than to up-sell (e.g. Sky+, multiroom) and cross-sell (including ads, SkyBet, financial services, and so on) to existing ones.
No, I didn’t say that. I said that all of those things are easier than selling more advertising. They are also more profitable.
Some of you may be interested in a speech looking at this issue from the point of view of advertisers and commercial broadcasters: How Battlestar Galactica Killed Broadcast TV
And the geeks shall inherit the Earth…
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