How, exactly, can anybody still justify the BBC’s licence fee? The TV industry is changing at breakneck speed, reminding us almost every day of why we don’t need the state to intervene for great content to be produced.
The news that Amazon, which recently entered the content market with Prime Instant Video, has signed up Jeremy Clarkson and his crew is another seminal moment in the demise of the old TV structures. The programme will air in 2016 and take on the BBC’s new Top Gear show presented by Chris Evans . Next year’s launch could be remembered as the tipping point - the moment a new generation of content producers finally dethroned the old TV incumbents, and the BBC in particular.
It’s not just Amazon that is swooping. Earlier this year, Zane Lowe, an award-winning DJ, left the BBC’s Radio 1, moving to Apple . These new players have huge pockets, immense marketing and promotional muscle, the best technology and are far better run than the bureaucratic, slumbering, depressed BBC.
Netflix, meanwhile, is booming: its penetration of UK households hit 14,1pc at the end of last year, according to Barb. But Amazon is desperate to fight back from a slow start (it originally purchased Lovefilm to enter the market): its UK share is 3.7pc, significantly less than its US presence. Hence why it is opening its chequebook.
As part of his recent results presentation, Jeff Bezos, Amazon’s boss, highlighted the fact that his company received 11 Emmy nominations for its Transparent comedy series and debuted six new pilots for kids. The Amazon model is yet another way to finance content. ITV relies on advertising and content production; BSkyB on subscriptions driven by a range of factors, including sports rights, original content, broadband, telephony and other services; Netflix on subscriptions; and Amazon on bundling content with its Prime Delivery service. At some point, the fee it charges for this combined service will go up again, but only when an even greater share of the population is hooked.
Crucially, Netflix and Amazon are not chasing ratings - they are chasing subscriptions. They are therefore able to cater for engaged niches better than free-to-air broadcasters - such as ITV or the BBC - that need big numbers. A new show that triggers 100,000 new subscriptions is worth far more to them than one that attracts 1m viewers to a traditional broadcaster (and even then such a number is too small to matter). The digital subscription model is thus more powerful: it works for niches (people who care about Scandinavian movies) as well as the mass market (lovers of Clarkson).
All of this is a major blow for the BBC’s model and rationale. Supporters of the current taxpayer-financed set-up argue that without public service broadcasting we would see a race to the bottom - but that is not what the investments that are increasingly being made by US entrants into the market would suggest. Thanks to new technology, it is now possible to produce cutting-edge content that is both extremely upmarket and commercially viable. It is also possible to produce water cooler, mainstream TV that was once the preserve of terrestrial players.
The BBC’s licence fee needs to go, for two related reasons. It is unfair and a horrendous distortion of the market, allowing vast amounts of taxpayer-financed content to be dumped for free on its website. Streaming services, national and regional newspaper websites and commercial TV all suffer. A state-owned car company that handed out vehicles below cost would quickly be challenged by the EU competition authorities; it is strange that such commonsensical rules do not apply to the Beeb.
The second reason is that the licence fee and the politicisation of the BBC that goes with it can only lead to the corporation slowly being undermined. It cannot launch its own streaming services, it will be forced to cut back on much of what it does currently and it cannot properly expand internationally or take on Netflix.
The Beeb’s campaign to retain the licence fee is a classic case of corporate short-termism: it is terrified of losing it and doesn’t want the medium-term pain associated with shifting to a voluntary model, but retaining it condemns it to an inexorable long-term decline.
My favourite solution is two-fold: first, the licence fee should be replaced by a voluntary subscription. It is the only way to save the BBC. Anybody who chooses not to subscribe would be cut off from the TV channels as well as from the website. The technology already exists for this, and the BBC would be free to innovate and turn itself into a modern tech and content giant, growing rather than shrinking.
It would need to fight for subscriptions, not audience numbers. It could offer a global package internationally, and either one or a variety for UK consumers. A cheaper deal could include just BBC1, BBC2 and parts of the website; a more expensive one could include access to all of the BBC’s back catalogue, available on-demand.
Second, the ownership of the BBC would be turned over to its subscribers, who would become members of a mutual. This would make sure that the BBC reflected the views and expectations of its audience, rather than those of a small elite; members would vote on major corporate decisions. In return for this special status, the BBC would have to provide its core radio output for free.
Getting rid of the licence fee would drag the UK media market into the 21st century. It would reduce distortions. Crucially, it would liberate the BBC and allow it - and other UK TV players - to lead the way in the global innovation race. The Amazon deal is a seminal moment for digital TV - we shouldn’t let it go to waste.
allister.heath@telegraph.co.uk
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