Industry split on BBC Online plans

Opinion is sharply divided on the Davies report’s recommendations that ads can run on BBC Online

Online publishers and new media agencies are divided on plans to allow BBC Online to accept advertising on sites designed for overseas traffic, and an additional injection of capital into its commercial sister site, beeb.com.

Many commercial online publishers believe the move will unfairly undermine their position in the market – a stance backed by the British Internet Publishers’ Alliance, which remains concerned about the existing cross-promotion between BBC Online and beeb.com.

But others in the sector are backing the recommendations, and argue that ads on BBC Online will help boost overall demand for online advertising in the UK.

The Future Funding of the BBC, published last week, chaired by Gavyn Davies and commissioned by the Department for Culture, Media & Sport, stopped short of recommending full-blown ad sales across all BBC Online’s activities, or privatisation of the service. But it does recommend:

  • BBC Online should be extended to new non-UK services, which should accept advertising and e-commerce revenues;
  • Consideration should be given to the further development of beeb. com, including a possible injection of private capital into the venture;
  • BBC Online, which is costing licence fee payers &£23m a year to operate, should set up a number of brands such as BBC Online America which would channel international traffic – accounting for half of the “hits” on the service – into advertising supported areas.
  • Such a move, argues the report, could eventually underwrite the bulk of BBC Online’s operating costs.

    Among staunch critics of the proposals is Roger Green, managing director of EMAP Online. “The Davies panel’s verdict on BBC’s online activities is bad news for advertisers. If the recommendations are accepted by the Government, it’s a certain recipe for stifling online innovation among media owners.”

    He adds: “It’s bad enough that the BBC is able to prop up its free-spending online activities with licence-payers’ money. But allowing BBC Online to carry ads, even from ‘just’ overseas, would add insult to injury and would further limit the ability of companies operating in the commercial world.”

    Green’s stance is backed by Philip Rooke, acting managing director of Carlton Online. “BBC.co. uk is great but its commercial entities should be shut down,” he says. “Public service media should be about creating the kind of content that would not survive in a commercial world and expanding the range of available information,” he adds.

    “But allowing a commercial service access to BBC channels that do not permit other commercial services is creating a monopoly. This will be detrimental to existing and new Internet companies. It will stifle investment and the development of a healthy UK Internet industry.”

    But Evan Rudowski, general manager of Excite UK, believes the Davies recommendations may be acceptable. “I would not have any problem with the BBC generating commercial revenues outside the UK. That’s consistent with how it has funded other media. It keeps the corporation non-commercial in the UK, but gives it access to additional external revenues to supplement its public funding,” he says.

    “I would have a problem with the BBC competing commercially within the UK.”

    Tom Bowman, UK sales director of MSN, goes further, claiming that any move to open BBC Online to advertising will boost demand in the sector overall. “Personally, I’d like the BBC to stay publicly funded. However, if BBC Online, which has good reach and content and a highly credible brand, started taking advertising it would be a great stimulus to the UK online industry,” he says.

    “It would attract more advertisers online which would be good for everyone, and I believe the extra advertisers would more than compensate for the extra competition we would face. Given that as an industry we now have 15 per cent reach of the UK audience we are due a breakthrough in ad revenue – this could be that stimulus.”

    Bowman is backed by Ajaz Ahmed, founder of new media agency AKQA, who says: “The BBC should take advertising because the site is among the best and most popular in the UK. This funding will enable the UK to be at the leading edge of Internet content and applications, while ensuring integrity in the product.”

    But Danny Meadows-Klue, general manager of Electronic Telegraph, adds his note of caution over the proposals.

    “It is not the ability of a Website to take ads per se that is a problem, simply that all sites must compete on a level playing-field,” he says.

    “The problem is dual funding and hidden subsidy. Subjecting UK Websites to this advertising competition could be seriously damaging; Gavyn Davies noted that the BBC’s accounts need to be opened up to scrutiny and certainly a fair trading investigation should be launched.”

    And Justin Walters, head of Guardian Unlimited, says: “The split between Beeb.com as a commercial service and BBC Online as a public service is confusing for users, and does not seem to have been resolved by the report.

    “The problem is that the distinction is arbitrary as a user, how am I supposed to know whether Animal Hospital or Top of the Pops are commercial brands or public service ones? Ultimately, the BBC will need to make all its services publicly funded for UK licence payers, and commercially funded for overseas users.”

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