Friday, November 21, 2008

A disproportionate economic argument that threatens the BBC

As conservatives everywhere are deserting the old free-market standard, one of the last facets of it that they will abandon (because it’s so useful in their culture wars) is their hatred of public service broadcasting in general, and the BBC in particular.

They hate the BBC because it has concrete standards. Or, perhaps, it may be increasingly accurate to say that it had them.
Even the slightly tarnished reputation though, the BBC is beyond compare – and this is why the press – those who see themselves as the BBC’s rivals – are at their most poisonous and demagogic when they attack the Beeb.

The BBC represents the thinking of metropolitan elites – smartass folks who think we are descended from Monkeys. It is antithetical to the politics of its most vocal critics, not on the grounds that it’s taken sides in an intellectual argument, but that it fetishises the application of reason and intellect to a problem over the prejudices of angry losers.

However, the most dangerous line of attack is always a market-based one – one that has a superficial logic to it. A logic that often attracts people who would otherwise be sympathetic to the BEEB. It has two key elements;

  1. It is illiberal to compel people to pay a licence fee
  2. The BBC distort the workings of the market that would otherwise be benign.
The first point is absolutely correct – in the same way that it would be correct to say that it is illiberal to compel people to pay a tax. But today, only ultra-conservative fanatics would argue this – and politically, ultra-conservative fanatics no longer even need to be included in discussions any more.

The second point is both wrong and irrelevant. Let us first look at why it’s irrelevant before showing why it is wrong as well – just to be sure:

When you get this kind of ultra-economic analysis, you know that its authors are long on logic and very short on context and their assumptions.

I can understand the argument that the motor industry (to take an example at random) should not be subsidised. Why protectionism is not in the interests of humanity as a whole. That it is inefficient and unjust. I’d even agree with it more than the tossers who flew in to Washington in their Lear Jets to beg for a handout yesterday do.

On an even more clear-cut case, there is no rational objection to Europeans importing 100% of their rice from Asia (if indeed they do). But importing 100% - or even the majority of their TV content from the United States would be a different matter, surely?

To some extent, you can see what TV schedules would look like by scanning the offering of your local multiplex cinema tonight. Nearly all films that are either US-oriented or some transatlantic fudge at best.

Also, look at the importance of the industry. In human terms, TV and radio alone are absolutely vast. On average, the UK citizen spends six hours a day consuming radio and TV’s output.

The importance to our democracy is huge. The importance to our culture is huge – UK produced content is a glue that holds the country together in many ways. And I’ve already outlined why it is politically important that we have a broadcasting ecology that has to meet agreed standards. Compare Sky News in the UK and Fox News in the US if you don’t believe me about the benefits of UK regulation.

They may be vastly important in human terms, but as an industry, it is fairly small. Patrick Barwise of the London Business School points out that it is a £12bn industry – a mid-sized one that is dwarfed by the telecoms sector that OfCOM also regulates.

We have a debate on broadcasting and radio that the government has allowed to be dominated by economists who think that TV can be reguated in the same way that telephones are. These people should only be a sideshow. The systemic damage to the UK of running a broadcasting industry that is tainted by protectionism is minimal – while the consequences of not doing so would be to threaten an industry upon which so much hangs.

The question of how much of our disposable income we spend on the licence fee – the supposed injustice of a non-progressive ‘tax’ is fairly irrelevant given the relatively small amount concerned, and the relative importance of the product. And nine-out-of-ten of the people who bleat about this will never complain about regressive taxation at any other time!

The words ‘relatively’ and ‘relative’ are bearing a lot of weight in that last paragraph. We are talking about the relative difference between a dormouse and an elephant here. But seeing as the BBC’s critics wouldn’t acknowledge a point unless it was nailed through the middle of their forehead, let’s do just that now in the forlorn hope that it'll register:

The presence of the BBC – and to a lesser extent Channel 4 – does not distort a 'benign' market equilibrium. This is because economics of broadcasting are very unusual. In most spheres of industry there is (or perhaps, there was?) an assumption that 'public' is inefficient and expensive, while ‘private’ is bustling, busy, and lean. In broadcasting, the absolute opposite is the case.

The cost-per-viewer-hour of BBC content is very significantly less than that of pay TV. This problem is compounded by the fact that the only way that pay-TV can bring money into the industry is through advertising or subscription.

In the absence of the BBC and C4, if you have to pay more for more expensive TV, you will have to increase the subscription significantly because TV advertising is not only in slow decline, it also can’t be increased (in revenue terms) by making more time available to it across the board.

More channels = less revenue for most of them (particularly ITV and C4 in the UK’s case). So advertising funded TV is in long term systemic decline. And does lightly regulated Pay-TV defy the gravitational pull and actually make programmes? Hard-hitting documentaries? Drama? Kids TV? No. It doesn’t.

It doesn’t at the moment, and it is an ideological fantasy that it ever will. Sure, Pay-TV generates significant revenues. But they go largely to a few football clubs, players and agents (many of whom are not UK based, if we’re arguing about whether the cash goes into indigenous content).

Any profit maximising pay-TV operator in their right mind will much prefer to source imported content because it's a great deal cheaper, massively less risky, and usually of quite a high quality in itself. US-originated content is also designed to create a more attractive context for advertisers, so it delivers the consumers to those who are prepared to pay to reach them.

It will never generate revenue for UK-based producers. Neither will it provide a universal service. If the BBC were scrapped, a profit-maximising Sky would have a highly expensive ‘premium’ service for a small wealthy minority, and a standard service that would be out of the financial reach of the poorest sections of the population.

So here it is. Get rid of the BBC and you can say goodbye to any noticeable level of locally produced programmes – drama, documentary, kids TV and news programming. The democratic damage will be incalculable in a state where public service broadcasting has filled the gap left by our lack of bicameralism. You also increase the vocal range of a bunch of very thick seedy right-wing blokes that wouldn’t know news or comment standards if they were to bite their knackers off.
The BBC has enemies. It's time that this was acknowledged. And it's time that the majority of people who wouldn't want these demogogic sad-sacks to increase their influence to take sides.


CharlieMcMenamin said...

Hmm. Yes - but it's probably a mistake to get trapped into going to the stake for the BBC in it's current form. per se, however vile Desmond and Dacre might be. It's the concept of public sector broadcasting which matters.

Phil said...

"It is illiberal to compel people to pay a licence fee"

And in the UK, we don't do that. Television viewers must pay the charge but non-viewers do not. It is not an absolute charge, but you have to pay it if you wish to view television.

Unfortunately, this is where the BBC licence fee becomes inconsistent. Unfortunate, because it fuels the idiots who want to destroy public service broadcasting. The licence fee is for TV, and the BBC do not charge for radio reception or for their internet services in the UK. Thus it is reasonable to argue that it should be possible to access non-BBC content via any delivery mechanism without buying a TV licence. Remember that it is a "TV Licence" for which we pay, not a "BBC Licence".

I'm also more optimistic about a world without BBC. It is insulting to viewers to assume that they'll watch dross without a BBC. There would be fewer high quality dramatic productions, but a likely result might be fewer viewing hours. If people don't see what they like on the telly, they will do something different instead. The existence of pirate radio stations demonstrates that if mainstream media does not deliver the goods, others will fill the role.

Paulie said...

"It is insulting to viewers to assume that they'll watch dross without a BBC."

No insult intended or implied Phil. The economics of radio and of TV drama are very different indeed. The entry-barriers are significantly higher and if the BBC goes, it will lead to a much more dramatic drop in the quanity of drama than you imply.

And I used the word 'systemic' deliberately. The drop in popular content on the BBC = a drop in viewership for quality drama on the BBC = a weakening of the case for investment in drama on the BBC = less quality drama on the BBC and so on. These = signs go through documentary to news and - hey-presto! Hello Berlusconi!

Remember, we don't have a bicameral parliament here in the UK. I'd venture an argument (if I had time now) that the BBC papers over this particular crack and we'd be a good deal less liberal without it.

Chris said...

I've found this argument much more persuasive, although I'm still not happy with calls for with us or against us. But there's a couple of things I'm not really clear about.

Firstly, while I agree there would be less serious programming, dramas, documentaries etc. if the BBC is done in I'm not sure why that means the BBC has to produce so much dross - much of it, these days, midatlantic mishmashes designed to appeal to its HBO partners, much of it seemingly at the expense of the serious stuff which they can now shunt off to BBC4 and the sort of PBS obscurity you denounced.

Secondly, knowing that you think 'the public sector and the private sector are very different animals indeed', does that same difference exist between public service broadcasting and the rest? If so, should the BBC avoid hiring people who move between the two without caring, even if they're popular and/or talented? Are there people inside the BBC who don't think about the public value and who are helping to destroy it, unconciously at least, from within?

And finally, isn't there as great a threat from the optimistic young people, and those who exploit them, who don't think the barrier of entry is high, that you can do high quality everything with a handheld camera, some mash up software and Google AdWords? I'd worry about them more, since at least the Daily Mail types pay lip service to the idea of content as valuable.

Aside - I'm not sure, but the existence of the BBC may help paper over more cracks than you would like, and that people expect less from newspapers and other sources because of its existence - they put up with the crap because they know people can always run to Auntie when it's serious.

Paulie said...


I'm a 'with us or against us' kinda guy. The BBC's rivals are the same in that respect, so the sooner someone does it from the BBC's side, the better.

The dross you speak of is the result of the BBC responding to the rivals that have a gravitational pull on it's programming. It's primetime schedules have to be just marginally on the high side (quality wise) in comparison to their rivals. It's the old thing about running away from a tiger. You don't have to be fast - you have to be faster than one other person. That's the most efficient use of their budgets.

On the public / private thing, I'm a democratic socialist. I generally think that the private sector can do some things better than the public sector, but health, education, care services and so on are different. Broadcasting is nearly there as well. I hope that the BBC remains - as it is - the biggest commissioner of content and the dominant player in the market.

Then it won't be the BBC drawing on commercial talent, but the other way around. I accept that this argument is problematic given the way that the BBC has been forced to oursource so much these day, but you can see where I'm coming from?

On the mashup kids argument, I don't think they're a threat at all. Spontaneous non-commercial media complements PSB I think. It's not the semi-monopoly situation that the BBC enjoys that appeals, is it? It's the fact that they are better than their competitive alternatives. I'd have no problems with a C4 that was a bit stronger at the BBC's expense. And in a fit of brainstorming extravagance, I think that there'd even be a case of setting up a second BBC and giving the public the choice of which one they pay their licence fee to - as long as they both work on PSB principles.

(Sorry for the dashed off reply here - I'll probably regret a few of those arguments once I've thought about them a bit more).

Chris said...

Thanks Paulie, I think I understand where you're coming from a bit better now.

In relation to giving the public the choice of which one they pay their licence fee to, I've wondered what would happen if the public could choose how their fee was allocated, 10% to Drama, 15% to News, 75% to Doctor Who sort of thing - the status quo? Football and Shopping Channel? a news agency with a £3bn a year budget?

matt said...

I think you are over-stereotyping her, Paulie.

>As conservatives everywhere are deserting the old free-market standard,

I don't think they are, and I don't think anybody else is either - unless you are referring to a version of free markets that is a caricature. I haven't heard even Trade Union leaders suggesting that we should abolish free markets. All they are doing is talking about more regulation in some areas, albeit with a lot of hairy rhetoric.

>one of the last facets of it that they will abandon (because it’s so useful in their culture wars) is their hatred of public service broadcasting in general, and the BBC in particular.

And I don't think "hatred" is the right word - for either public service broadcasting (who was in power when Channel 4 was set up, for example?) or the BBC - and that the "ultras" are a noisy minority.

I think you have slightly too many straw men, here.


matt said...


Ooops, here.

Paulie said...

Sorry Matt - must have missed this comment. Just seen in now.

Well, if you think that we're still having to argue every issue against a presumption that business does things more efficiently, effectively or honestly than its institutional rivals, then you aren't tuned into the same wavelengths that I am.

Things have changed hugely over the last couple of months - in so many ways. It takes people a while to adjust, but beleive me, most right-wing commentators are changing the subject now on a lot of occassions on which they would have just blundered on with the same old limp faith-based nonsense. Today 'a little more regulation'. Tomorrow - diverse governance models. The day after, a need to look at new and existing forms of collective action.

I'd get used to it if I were you?

And if you think that the Tories don't hate the BBC, you may want to ask why they hired David Elstein to head up a review of their policy towards PSB? I doubt if there is a more widely acknowledged anti-PSB commentator in the UK than David Elstein. More to the point, Matt, have no not read or listened to any Conservatives in the last decade? The hatred of the BBC is quite pronounced.