As we embark on 2023, it is somewhat depressing to see the BBC about to be at loggerheads with the commercial news publishers all over again — this time because their controversial plans to expand their online news service has been approved by Ofcom.
There has been much hand-wringing, if not outright anger, at the decision by Ofcom to allow the BBC’s expansion plans — while at the same time contracting their local radio station service — effectively forcing their audience online to get their news.
The News Media Association has strenuously resisted these plans — but to no avail, with Ofcom making a materiality judgement that the plans to deploy 131 news journalists into the regions will not significantly impact the revenues of commercial news providers.
As a reminder, the plans involve creating 11 investigative reporting teams across the country and increasing its daily online news service for 43 local areas, including launching new websites for Bradford, Wolverhampton, Sunderland and Peterborough.
At the same time, it is axing 179 jobs in local radio and TV services.
Ofcom has pledged to closely monitor the impact the BBC expanded news service may have on total revenues of online local news providers, estimating it to be less than 1pc.
It says it will intervene if the actual impact of the BBC’s proposals on audiences is harmful to competition.
These are vacant words.
Let’s dissect the issue here as Behind Local News puts into context much of the debate that has followed this decision.
Ofcom has used a false measure to determine the impact the BBC may have on commercial news publishers.
Most news publishers are still grappling with finding a viable revenue stream to fund their journalism. Currently, very few have found a way of successfully charging readers to access their content. This leaves the main funding solution to be programmatic revenue.
It is true, a few more stories published by the BBC will not materially affect the programmatic revenue of the mega news sites operated by the likes of Reach, Newsquest and National World in particular.
But what it will do is provide enough of a news service to satisfy the news interests of a local audience, meaning that they won’t have to flit between different news providers.
And with news publishers searching for a viable reader-based revenue model, this is where it will hit hard. This will prevent them from locking content away behind a paywall or into a subscription service because that content will be freely available elsewhere.
So Ofcom has read this wrongly. There may well not be a big impact on revenues, but there definitely will be an impediment for publishers looking to progress with a reader-revenue-based digital model — something Enders has said is going to be vital to their survival.
The commercial news providers, which also include local radio in some instances, are not able to operate websites that give a pleasing user experience to their audiences because of the need to run advertising to fund their business models.
The BBC does not have this issue, indeed its Charter bans it from running advertising on its sites.
What this means is that if the BBC news service, particularly where it is launching dedicated sites in Wolverhampton, Sunderland, Peterborough and Bradford, offers enough of a local news service to satisfy the local audience, it will have a distinct market advantage over the commercial sites, which are slower to load and irritating to readers because they are weighed down by advertising.
Surely this market advantage should be taken into consideration.
So the Ofcom decision is baffling when it says: “We also consider that, while the proposals will mean that the volume of BBC online local news content may grow and attract more audience, it will not necessarily replace the interest in and consumption of commercial online local news content that already exists.”
The BBC will claim that simply providing one or two stories per day, set against the 30 or so stories published by the commercial publishers, will not provide effective competition.
However, if Ofcom had done its homework, it would have found that most online readers only view about two stories per visit to an online news site. If they can read those two stories on the BBC sites, then of course this will impact consumption on the commercial sites.
But this should not all be about the threat of the BBC. Commercial news publishers need to work a lot harder to provide unique journalism on their sites and provide a differentiation of news from what is freely available.
If they are to succeed in finding viable subscription and registration models, they need to improve the provision of journalist-generated stories that are unique to their sites. There is much work to be done here.
The Reuters Research Institute Digital Report 2022 provides worrying evidence that readers are turning away from news providers because they are not providing them with a news service they want to engage with.
This is a stark warning for commercial news providers that they need to up their game and have a radical rethink about what quality news actually means for their audiences.
But they now need to do this against a backdrop of facing increased competition from a news service that does not have the same challenges.
Ofcom’s promise that “if evidence emerges of harm to competition from the BBC’s ongoing activities in this area, we will not hesitate to step in using our BBC competition powers” are indeed, empty words.
My business, Chrysalis, can help media companies to focus on how to improve their content offering. I am working with 12 regional publishers and the Financial Times Strategy team to help them to discover ways of generating revenue from their websites. If you are interested, please contact me.