The BBC is reportedly planning to charge viewers for access to its archive programming. That may come as no real shock but it is surprising that its commercial arm, BBC Worldwide, is apparently not involved. The BBC says that any plans for such micropayments would need to be developed in conjunction with the industry and rights holders and denies that it would lead to a two-tier licence fee.
According to a report in the trade magazine Broadcast, the payment proposals are thought to have come from the BBC Online Direction Group, which is chaired by Ralph Riviera, the director of Future Media, who joined the corporation in October 2010 from Major League Gaming in New York.
It seems extraordinary that BBC Worldwide, the commercial division of the BBC, should not be involved in plans to provide paid-for access to its programming.
Ever since an online video service was first floated, from the early trials of an integrated Media Player or iMP in 2004, the idea was that there would be a catchup window during which programming would be available for free, after which it was envisaged there could be a revenue model.
At the same time, there were plans for a Creative Archive that would make available programming from its back catalogue. So far, those plans have not amounted to much, as it seems resolving the relevant rights issues remains complex, if not intractable.
The BBC iPlayer has been an undoubted domestic success. In 2011 the iPlayer received nearly 2 billion requests for radio and television programmes, with a record 187 million requests in December. While the majority were from computer platforms, there is significant growth across tablets and network-connected televisions. The BBC used to publish detailed breakdowns of usage, but appears to have stopped doing so in recent months.
BBC Worldwide, the commercial division of the BBC has meanwhile launched its own global version of the iPlayer. This includes a selection of both current and back catalogue programming, presented as a Best of British proposition. This is available on a subscription basis for €6.99 a month, or €49.99 a year. Already launched in a number of European countries, Canada and Australia, it is expected to extend to the United States and other markets.
The global BBC iPlayer subscription is currently only available on the iPad, iPhone and iPod Touch, with Apple presumably taking a healthy 30% of any revenues.
However, the subscription version of the iPlayer is not available in the United Kingdom, although, or perhaps because, many of the programmes are available on DVD and Blu-ray discs published through BBC Worldwide. As well as the risk of eroding these retail revenues, there may be a concern that launching a subscription service in the United Kingdom may confuse the principle that BBC services are free at the point of use. Nevertheless, assuming it becomes a worldwide success, it is difficult to see why the service should not be available in the United Kingdom, from where it originates.
The BBC receives over £3.5 billion a year in licence fee income, which is guaranteed until 2016. It spends over £120 million a year collecting and enforcing the licence fee. BBC Worldwide, the commercial division, globally generates gross sales of £1.1 billion, but only £160 million in profit. BBC Worldwide currently generates around £45 million a year in profit from the sale of DVD and Blu-ray discs — a drop in the bucket of total BBC income.
Of course a friction-free payment system, perhaps linked to a digital wallet or a broadband subscription bill, could generate significant revenue if it people are prepared to pay a few pence for programmes from the archive. In reality, the issue may be whether it would even cover its costs, yet alone provide significant revenues to independent producers and rights holders who may reasonably wish to be remunerated for online usage beyond a brief catchup window.
One might imagine that finding new business models would also be a key strategic objective for British broadcasters. The BBC is a partner in the YouView venture that aims to launch later in 2012. The other main terrestrial broadcasters and two leading broadband service providers, BT and TalkTalk, also back the proposed hybrid broadcast and broadband platform.
Yet despite years of development, their overdue joint venture initiative, YouView, has no intrinsic provision for either payments or targeted advertising, which appear to be extraordinary omissions.
The only reference to payment in the 230 pages of the YouView Core Technical Specification is to an unspecified Player App “through which payments are made”. It suggests this could be a service specific application but could be through a general user interface. There is no reference at all to advertising.
Although the prospects for YouView remain uncertain in an increasingly competitive market for connected television devices and displays, the ability to pay to access programmes from a vast library on a modest micropayment basis could prove attractive to some.
The presentational problem for the BBC is that any prospect of paying to access programmes that have previously been transmitted free to air raises questions about the licence fee and the relationship to commercial operations.
Meanwhile, commercial services from the likes of Sky and Virgin Media, Amazon and Netflix could prove a more politically pragmatic route to market for paid-for access to programming, licensed through BBC Worldwide.
Whether payment for access to archive programmes is either appropriate or commercially viable remains open to question. However, a move to any payment model may represent the thin end of a wedge that could ultimately undermine the licence fee.