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The history of

The history of

Way way back in the mists of dotcom time (1999), I worked for – basically the website for the commercial arm for the BBC. Unfortunately, it eventually became the victim of a rather bitter squabble between public service BBC and BBC Worldwide, and the public service side won.

I’ve stumbled across an article from The Economist which succinctly goes into the history of Unfortunately, it’s been put on a Facebook forum which isn’t exactly accessible, so without any copyright permissions whatsoever, I’m putting it up here. 🙂 (UPDATE: Now available on the Economist website!)

In 1995, when BBC Worldwide, the public-service broadcaster’s commercial arm, started to make plans for an online service, the Internet was regarded in Britain as a niche for nerds. Nobody in the mainstream BBC, which looks down on Worldwide, showed much interest. The BBC’s management saw it as a peripheral medium that would not be part of the BBC’s core operations, but which, rather like magazines, could be left to Worldwide to make a little money from.

Worldwide, realising that it lacked the expertise to do the job alone, negotiated a joint venture with ICL, a computer company. ICL, it was agreed, would provide the technical support (and most of the money) to build up a presence on the Web, while the BBC would provide the content. By the time the site was up and running, in late 1996, John Birt (now Sir John), the director-general, had got the new media bug. The Internet, he realised, was huge, and the BBC could not afford to treat it as a sideshow. So, gradually, the public service began to reclaim it.

First it was decreed that there would, in fact, be a public-service online site, paid for by the £94 licence fee—a tax which every Briton has to pay to the BBC for the privilege of owning a television set. It would be distinct from the commercial service, which Worldwide would run, and which would take advertising. The public-service site would get to use the BBC’s brand, and would call itself BBC Online; the commercial site would not get the BBC’s brand, and would be called There would be a link between the two, but only a small one, in the margin, to discourage the idea that the BBC’s public-service operations were cross-subsidising its commercial activities.

ICL was apoplectic. It was paying most of the R&D costs of the BBC’s online operations through the joint venture; and in its view the BBC’s main contribution was one of the best brands in the world. Now, after the deal had been done, it was being told that it could not use that brand after all. Nor was that the end. Bit by bit, the content that Worldwide had expected to be able to use was taken away. First, it was decreed that the news was too central to the BBC’s public-service role to be exploited commercially; education, it was decided fell into the same basket. Then “current output” was also put in the public service’s basket. The contract had been sufficiently cleverly worded that there was nothing ICL could do. And the consequence is an unsatisfactory competition between two parts of the same organisation.

The BBC’s Internet site is without question the best in Britain. After some initial hiccups, it is well-designed and offers more high quality information that any other site can match. Its audience, measured by page-views, is far larger than that of any other British Internet operation, and is second only to Yahoo, the world’s most successful site.

So it should be, for it has had money lavished on it. The BBC is committed to spending 10% of the £2 billion it receives from the licence fee on online and digital services. According to a recent answer that the government gave to a parliamentary question, BBC Online will have had £65m spent on it by the end of this financial year. It also gets hugely valuable free publicity from promotion on radio and television programmes: according to the British Internet Publishers’ Association (a group of private-sector publishers concerned by the success of the public-sector BBC) the advertising (which is not accounted) is worth around £2.8m., meanwhile, lags way behind BBC Online, along with the other private-sector publishers. Deprived of the strength of the BBC brand, it has been driven to make a deal with Microsoft to get promotion through its websites. So the BBC’s poor cousin is now hanging on to Bill Gates’s coat-tails.

There is still no system for deciding which bits of content go to BBC Online, and which bits to Worldwide is at present planning a site with information on clubs and pop concerts, through which it could generate revenue by selling tickets. BBC Online says that it wants to do that, too, without the e-commerce, because (you guessed) information about cultural events is core to its public-service role. Sometimes disputes are settled by ad hoc committees or by the Policy and Planning department, whose job it is to guard the integrity of the BBC brand. Sometimes disputes are not settled, and the two sides of the Chinese wall go their own way.

The result is confusion and, often, duplication. There were two sites, one on either side of the wall, for the Edinburgh Festival. There were four different sites during the World Cup. wanted to use “Match of the Day”, the BBC’s football television programme, to brand one of its sites, but Policy and Planning vetoed the plan on the grounds that “Match of the Day” was a core public-service brand (even though Worldwide already produces a “Match of the Day” magazine). Worldwide planned to cover a Dr Who convention: so, it emerged two weeks beforehand, did the public service. Executives on each side accuse the other of stealing ideas, or of withholding information from each other.

Some argue that the way to resolve this problem is for the public-service side to take over the whole operation. But there is a difficulty here. It is deep in the BBC’s tradition, and its constitution, that the services for which the licence fee pays must be universally available, as are broadcast television and radio. The Internet is not: only about 15% of Britons have access to it. Nor, however wildly consultants draw their optimistic take-up curves, is the Internet going to be universal for the foreseeable future. What’s more, those who do have access to the Internet are, by and large, well-off. The licence fee is already a regressive tax, because the poor pay a higher proportion of their income than the rich for the same service. Using it to pay for services used mainly by the better-off makes it even more so.

The BBC has developed a new argument to get around the universality problem. The “bundle” of services it provides should be universally accessible—in other words, if you cannot get some of them, tough. But that destroys the original distinction between commercial activities (which were not available to all), and licence-fee funded activity (universal). There now seem to be no rational grounds for deciding what bits of the BBC should be commercial.

There is yet another source of embarrassment. Not only is BBC Online unavailable to most Britons: a large proportion of its users, it turns out, are abroad. The head of News Online admitted, at the end of last year, that a third of page-views came from America; insiders say that more than half of the users of the news service are abroad. Impoverished Britons, then, are coughing up their licence fee money to provide a top-notch news service to mostly well-off Americans.

Why not, then, make the whole operation commercial? Sir John would loathe it, but some of those in overnment suggest that this would be the best way around those licence-fee embarrassments. That, however, would provoke understandable rage among Britain’s private-sector Internet companies.

These companies argue that Britain’s Internet industry has a hard enough time already. It is squashed between the strength of the BBC’s brand and the power of the big American players. If the BBC were allowed to compete with them for advertising as well as for eyeballs, they say, they would be dead in the water.

They are probably right. There is not much advertising to go round on the Internet. The most successful Internet publishers are losing money; and only the most optimistic are expecting to make money within the next couple of years. The BBC’s audience is huge, and it would therefore pick up most of the advertising left by AOL, Yahoo, Amazon and the other American giants. So if the government forces the BBC to choose the commercial route, it risks leaving Britain with no big players in this potentially massive global industry, except the BBC.

May 1999
The Economist

1 Comment

  • Charlie

    Just stumbled upon this after watching an ancient episode of "This Morning with Richard Not Judy" and seeing an advert at the end for an "online chat with Lee and Herring at".

    Absolutely fascinating! And quite scary that an article that seems to be out of ancient history is only twelve years old. "The BBC’s Internet site is without question the best in Britain."… "Only about 15% of Britons have access to [the internet]. Nor, however wildly consultants draw their optimistic take-up curves, is the Internet going to be universal for the foreseeable future." How times have changed!

    That said, this part seems as relevant as ever… "The most successful Internet publishers are losing money; and only the most optimistic are expecting to make money within the next couple of years."

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