Thread by @CoppetainPU

Some thoughts on financing the BBC

How to assess the options—Licence fee? From tax? Subscription? Advertising?)

• business model only (“if it’s such value for money it can easily sell subscriptions”)
• public service (society as a whole benefiting)

Finance➡️Economics…

1/15

A couple of key concepts

• ECONOMIES OF SCALE. Eg news—from Radio Stoke to Westminster to BBC Washington Bureau to Pashtu Service (Afghanistan), reporters feed a central newsroom supplying multiple BBC outlets. Similar sharing in arts, music, documentaries, sport, more …

2/15

• EXTERNALITIES (positive), the public service dimension—when something (broadcasting) has a broader benefit than simply between the producer and consumer (more than just the viewer enjoying Newsnight or East Enders)

3/15 en.wikipedia.org/wiki/Externali…

A SMALL public service: one road, Livingston to Falkirk

The internal benefits go to those using the road. Positive external benefits include eg residents’ health from delivered food and medicines, but they will only be locally sourced.

(Ignore negative externalities)

4/15

BIG PUBLIC SERVICE: stick the road into a nationwide network. The benefits multiply.

Tesco sets up a distribution centre in Livingston. Goods supplied from everywhere. Residents along the Falkirk road have more healthy choices. Relatives from Edinburgh can visit too

5/15

That’s economies of scale and positive externalities working together.

It’s why having a large National Health Service is better than small independent hospitals and clinics.

And it’s why a big BBC can provide a better public service at lower cost.

6/15

How to pay for it?

This⬇️ ignores both economies of scale and broader benefit. It’s the USER-PAY PRINCIPLE. You pay for what you use.

But would @JuliaHB1 apply that to using the road network? You only pay for the roads you use ➡️ every road has a toll.

Or to healthcare?

7/15

The alternative is the PUBLIC SERVICE PRINCIPLE

We pay for the lot—more economical + public benefits

How expensive is it? This⬇️ is only possible because of economies of scale. Basic Netflix is half the price but with much less than half the output

8/15

https://twitter.com/daraobriain/status/1482839166010466308?s=20

There is no way that a user-pay approach can preserve the BBC as a public service. If it’s subscription only, the number of subscribers will fall, and income too. The economies of scale will be lost.

But “public service” and “positive externalities” are difficult to assess

9/15

The public benefits—information, “culture”

I’m sure there are studies showing how CBeebies and cbbc are better for kids than the commercial cartoon channels, but few see it.

How to measure the benefit of this⬇️?

EVERY DAY FOR 6 WEEKS, EVERY YEAR

10/15

Don’t get me wrong. It’s not just classical music.

Compare the BBC’s contribution to live music (TV and radio) with, say Classic FM or commercial pop/rock radio or any other TV channel. Forget streaming services like Spotify or Tidal.

11/15

The BBC has set quality standards that other broadcasters have then matched (or tried to) or occasionally have done better

One measure of the value of the public service is the high level of trust BBC news enjoys in comparison with other media.

12/15 reutersinstitute.politics.ox.ac.uk/news/bbc-under…

But there will still be those who say that none of that is important. Who’s to say they are wrong? That’s what the political process and public opinion will decide.

Implicitly or explicitly—by deciding on the financing method.

13/15 theguardian.com/media/2021/mar…

These are likely to cut economies of scale and the public benefits:

• subscription—numbers will fall
• advertising—the market is weak, look at ITV 1–4
• a reduced or voluntary licence fee

That matters if the BBC is valued as a public service

14/15 committees.parliament.uk/publications/5…

Other options are available such as tax revenue (if protected for the BBC) or keeping the licence fee (affordable for most, tough for some, and regressive)

I think we should stand by the BBC, or even walk with it …

15/15/ends