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Digital debt due to Auntie
The commercial players in any new media environment, whether that is web 2.0, web 1.0, video- or music-downloads or even going as far back as the launch of television and radio, owe a sizeable debt to that least commercial of players, the BBC. And it's a debt that is never acknowledged.
Unlike its commercial rivals, which have to turn profits to be successful, the BBC does not rely on these in order to survive - its £3.2bn annual revenues from licence fees come in every year all the same. Some see this as a bad thing, a legally enforced tax on people who might not watch the BBC much. Maybe so, but on the other hand, it does allow the Corporation to do things that other companies see as uneconomic, unfeasible or simply too risky for their shareholders.
Classic music downloads, for example. There wasn't really a market for symphonies and operas on digital MP3 players a few years ago. The commercial music labels hadn't even recognised the market for them even existed, perhaps firm in the belief that the MP3s were all about teenagers. And classical music recordings were last in the queue for digitisation for iPods.
But then in 2005 the BBC launched a Beethoven week on Radio 3 and offered free downloads of one of the composer's symphonies through BBC Online. BBC mandarins estimated there would be between 3,000 and 5,000 downloads. They ended up with 1.5 million. The Beeb caught plenty of flack from the music labels for giving away free music downloads, just as they were struggling with the piracy issue. However, the BBC's explanation was that since the public had already paid for these recordings via the BBC licence fee, they shouldn't have to pay twice.
The upshot was that now there's a major market for classical music downloads and it's a market that commercial companies (which at the time criticised the BBC) are now exploiting, thank you very much. Since the BBC doesn't see things in terms of profits and shareholders, it can do things that actually stimulate a market where before there wasn't one.
Another example is perhaps the web itself. The bbc.co.uk news site has been phenomenal in creating huge public awareness and usage of the web (beyond the geek community), awareness that others are now exploiting for their own perfectly proper commercial ventures. Early BBC investment, put simply, helped the web take off in the UK.
The same can be said of digital terrestrial television. After the UK government left the digital terrestrial TV spectrum in the hands of the private sector for five years, all consumers got was blank screens and a bankrupt ITV Digital, which cost the commercial broadcaster £1.5bn. Freeview, backed by the BBC, grew from the ashes and is now not only a healthy vehicle for commercial players like ITV and Disney to reach a strata of UK viewers that have for whatever reason shunned BSkyB's pay-TV marketing message, but is also central to the government's analogue switch-off plans.
It goes without saying that the BBC created the most lucrative media market ever - television - by popularising the medium long before there were even any commercial channels out there. Same for radio. So it's a bit rich when commercial companies later accuse the BBC of distorting markets that often weren't there (or at least were much smaller) before the BBC turned them mainstream. Nevertheless, this is a perennial accusation made by companies that like to exploit these markets all for themselves.
So it's no real surprise when the BBC's plans for online video-on-demand were criticised as being market-distorting. The BBC's recently launched iPlayer service allows viewers to catch-up with shows they missed by putting them online for seven days after the TV telecast, for free. Nevertheless, it has been criticised for clogging up the web with too much video - from companies that sell software to put video on the web. You'd think they'd relish something that creates more demand for their services.
Furthermore, the Office of Fair Trading has now referred the BBC's proposed iPlayer-style commercial video-on-demand joint-venture, which is dubbed Kangaroo and also includes ITV and Channel 4, to the competition authorities. The Competition Commission will now consider Kangaroo's implications and has until December 12 to publish its findings. The inquiry means it is unlikely that Kangaroo will launch this year. The move will be welcomed by US companies such as Apple, Google and NBC Universal that would like the web video market all for themselves, and the delay will give them more time to grow their businesses in the UK. I'm sure they are rubbing their hands with glee.
