There is the BBC's new media overspend...and then there is Google

 by Martin Belam, 1 June 2008

Yesterday I bookmarked a piece on The Guardian's site which gave Edward Roussel from The Telegraph the chance to put his view on the BBC's massive new media 'over spend'. There are some good contributions from Jemima Kiss and Emily Bell in the comments, and the whole thread is well worth a read.

Roussel makes the point that the BBC's new media budget is greater than the digital budget of all UK newspapers put together, and that it threatens to crush them all. I'm not entirely sure I can completely buy that. The print and newspaper industry in the U.S. is also suffering a sales decline and a problem with a changing business models due to new media, and that can't be laid solely at the BBC's door. And as ever, when complaining about BBC new media spend impacting on the wider industry, the fact that 25% of the budget is mandated to go straight back out the White City doors to the independent digital production sector is omitted.

It also has to be said that the newspapers themselves have not been slow to move into producing video and audio content which is squeezing out smaller companies, for which the BBC required regulatory approval, and they did not. The BBC's mp3 podcast downloads were a trial for a long time, and the protracted birth of the iPlayer was not solely down to poor management, but also included some enforced review processes. The Telegraph and The Guardian, meanwhile, can produce their podcasts and video and have them policed by, I guess, the PPC, but I don't even know for sure if their rules of engagement cover that type of content yet.

The 'over spend' is more of a case within the BBC of re-arranging the slices of the pie, and the fact that television commissioned more 'associated web content' than was expected. People in The Guardian's comments thread suggest in the private sector heads would roll for this. I'm not entirely sure they would - the Corporation as a whole isn't over-budget, it is the equivalent of the IT department being asked to build more stuff than was anticipated, and the cost is coming out of money that was previously allocated elsewhere. In fact, surely one of the problematic outcomes of 360° commissioning of TV and online content together is that is hard to predict exactly how much online spend there will be until you see what TV has been commissioned.

Nevertheless, it seems to me from a distance that somehow the UK has managed to end up with something like the worst of all possible worlds as its regulatory framework. The BBC Trust was meant to be more independent and have more teeth than the old Board of Governors. Instead, for its first service review, it picked the soft target of the website rather than BBC1 or Radio 2, and has basically shrugged its shoulders at very lax budgetary control that allows 48% more than was intended to be spent in a particular area. That can't give anyone much confidence in the process. And in the background Ofcom is poised ready again to fine the BBC, and punish Licence Fee payers by confiscating their money and putting it straight into the treasury.

Meanwhile, more importantly, Ofcom can't prevent any commercial company from outside the UK moving in and squeezing advertising revenue and attention time. In his whole piece, Edward Roussel makes not one mention of Google. I'm loathe to call it the elephant in the room, because, frankly, Google is bigger and more aggresive than that.

I've watched time and time again in usability labs that for a lot of users "Everything starts with Google".

Well, when Google add street-views to their UK mapping product, and you access it directly from Google search, that will be the death knell for Multimap and Streetmap in the UK. When Google add more information directly from a look-up of a postcode via search, that will be the death knell for Upmystreet and similar British services. Google News already does a search 'by location' option in their advanced search, and once they start offering that as a personalisation option on Google News, that will be yet another nail in the coffin for local newspapers and news services. Never mind whether the BBC will produce 'ultra-local' news hubs, it is Google's infinite budget, spotless brand, and seemingly completely free hand in the UK market that poses a bigger commercial threat to all of the UK's web industry.

There is no doubt that the BBC has a massive impact on the new media market, and there is an idealogical component to whether people think that is a 'good thing' or not. What increasingly worries me is that we seem to be spending so much time and effort in the UK arguing about whether our playing field is level, that we haven't noticed that Google has already run off with our ball.


Why do you keep defending the BBC? It is funded by the tax-payer. People go to jail for not paying, usually those on low-incomes. What would be so wrong if it was a third of its current size? At a third of the cost. Or would that reduce the income of the 'consultants' who do so well out of the tax-payer?

Name any market, *any market at all* outside of search, where Google has become dominant.

Multimap (now MS owned) is going from strength to strength and I still know more people with hotmail and yahoo email addresses than gmail.

Orkut was a dismal failure at the same time as Myspace and Facebook became phenomenons.

Watched a video on Google Video recently? Yeah, that went well. Even youtube can't crush its competitors, with services like Vimeo doing very well.

Google is notorious for it's scattergun approach to expansion and also the fact that outside of search, it's a failure. There as much a threat to anyone as a wet Yorkshire terrier.

The worst thing about this overspend is that it's amazing how little we get for our £110 m.

Dan, you make some good points. Although Google has a diverse portfolio of products, very few of them have made much headway in their respective markets.

"Name any market, *any market at all* outside of search, where Google has become dominant."

However, I can name a couple quite easily: AdSense? AdWords? In short, online advertising.

Google is shortly set to overtake ITV's ad revenue in the UK. A vast percentage of the UK's advertising spend that used to go to media companies to support their content production is now instead going straight into Google's war chest, and there doesn't seem to be anything that our regulators can do about it. Nor does anyone seem to have noticed much - as you yourself just demonstrated. Google don't make money from dominating search, they make money by dominating online advertising.

I include adsense/adwords in "search" as the former grew organically from the latter -- the selection of adverts uses the search db to serve contextual adverts. (I use Adsense myself.)

It's the only part of Google that makes money (though as you say, quite a bit of money). However don't forget that the publisher makes money from adsense, it doesn't all just go to google!

I agree with you martin, Google seems to be comming through the back door while we are arguing. Is it really such a bad thing though? Google does dominate certainmarket areas but that is because they provide something that others dont. In my opinion is will create competition, eg. the google street view vs multimap - multimap will have no choice but to develop something greater.

I though of a market too, 99% of the blogs I have been to use the feedburner app for rss feeds, that is google owned.

Anyway, I have think the BBC has nothing to defend about its overspend, as the post says, the money was taken from somewhere else within the company and as long as we get good quality services provided to us then we have nothing to complain about.

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