This report was produced by Enders Analysis and is published here in full with thanks:

The government’s Green Paper on Charter Renewal asks a number of questions about the future scale and scope of the BBC’s TV, radio and online services. This report concerns the BBC’s online services, and in particular BBC News, which is supported by the licence fee paid by UK TV households. 

Question 4 of the Green Paper asks: “Is the expansion of the BBC’s services justified in the context of increased choice for audiences? Is the BBC crowding out commercial competition and, if so, is this justified?” 

The Green Paper also states the following concerns: “The BBC has a variety of impacts on online markets. For example, the popularity of BBC News in the UK (BBC News website had an average 27 million UK weekly browsers in early 2015, and more than 65 million worldwide) has led to suggestions that the scale of BBC’s online offer is impeding the ability of other UK news outlets to develop profitable business models, such as paywalls and subscriptions, in existing and new markets.” 

The BBC’s online news presence has clearly become contentious in this government. Speaking on The Andrew Marr Show, Chancellor Osborne criticised the BBC’s “imperial ambitions” in online news, worrying that it is becoming “the national newspaper as well as the national broadcaster.”
 
Several major UK newspaper publishers have editorialised the same antipathy towards BBC News:

• - The Times and The Telegraph have published editorials decrying the BBC’s ‘imperialism’ online.
•  
• - The Telegraph’s editorial on 6 July was representative in its argument: “If ever there was an example of how the BBC has drifted from its core function, it is the website, which consumes vast sums of public money, with the apparent intention of competing with a British newspaper industry that already provides world‑class online journalism.”

- The Times has argued that “nowhere is [the BBC’s] dominance less warranted than online, where the array of alternative sources is dazzling.”

There is little doubt that UK newspaper publishers are experiencing as a whole a difficult transition from print to digital. Several reasons for this state of affairs are set out in detail in this report: bluntly, the BBC is not among them. The internet has wrought tremendous damage to the traditional sources of revenue for commercial news providers. Although online offers much greater audience reach in the UK and globally, the average revenue per user (ARPU) is a fraction of print. 

The report then offers an assessment of the claimed ways in which the BBC is ‘crowding out’ the commercial sector, and explains why scaling back the BBC’s news website is unlikely to help UK publishers with the problems they face. It concludes by outlining some damaging consequences that would result from reducing the BBC’s online news operation.
 
The supply side of the market for online news in the UK has only one provider of news that has to pursue public purposes: BBC News. All the other sources of news online are opinion-led and commercial, making the BBC profoundly different from other suppliers. There may be dazzling choice for the consumer, but the BBC is irreplaceable in effect.
 
Audiences choose to visit the BBC News site in large numbers because it is a trusted source for news. The BBC Trust’s review of the BBC’s news output found that trust “is a top of mind association for BBC News and current affairs among all audiences. It is described by many as the ‘official’ news provider, standing above competitor providers as an arbiter of truth.” We believe this flows directly from its requirement to focus on public purposes and its public accountability. Commercial news publishers, on the other hand, face comparatively few requirements other than to satisfy their proprietors or shareholders.
 
The market for online news is expanding through the widespread adoption and use of smartphones, growing audiences for all news publishers. In this context, BBC News provision is not antagonistic to commercial news provision online and is instead complementary: without commercial news publishers, the BBC would lack competition for audiences, who would also not have as wide a plurality of views available. Equally, though, the BBC helps set standards of quality, trust and impartiality across the sector, can focus on less profitable news genres, and can boost traffic to the rest of the sector through a concerted ‘linking out’ policy.
 
The evidence we have suggests that, because the BBC subtracts a very substantial audience from all advertising phenomena, the outcomes for commercial publishers in the UK have been better than otherwise. This benign situation mirrors that of Germany, where a solid PSB system underpins a strong commercial creative economy.   

Causes of newspaper revenue decline

Print circulation decline
 
The circulation of newspapers has been in decline in the UK for decades, but the rate of decline has increased in recent years – particularly since 2009 (see Figure 1). Some newspapers will cease to exist in print sooner than others, but all will eventually (though some might develop news magazine products). Some will survive as digital news businesses, but many may not.

Although TV remains the single most widely used platform to access news by UK adults, sourced by 75% of this group, the internet has steadily gained share, rising to 41% of UK adults in 2014, edging newspapers at 40% (Figure 2). While newspapers cater to an older demographic, the internet is the main source of news for the majority of people under 45 (Figure 3).

However, few people pay for online news – only about 6% of the population did so in 2014 – and most online users consume free-to-the-user services supported by online advertising, public funding or subsidies from other revenue sources.

One reason for the widespread use of online as a source for news is the breathtaking array of sources (Figure 4). BBC News is the single largest site in terms of users, with close to 25 million monthly unique users in June 2015, narrowly ahead of MailOnline. Both BBC News and MailOnline pale into insignificance next to Facebook with just over 40 million users, 83% of the online population.

Unlike the supply of print newspapers, where there are significant barriers to entry, there is no limit on the number of news suppliers online. UK supply of online news include the sites of UK and US newspaper publishers (The Daily Mail, The Guardian, The New York Times), those of TV news suppliers (ITV, Sky), digital-native sites (The Huffington Post, BuzzFeed, Vice), and hybrid digital native and TV services (Yahoo-ABC News, NBC News). In addition, academics, think tanks, bloggers, and so on – completely outside the news industry – are producing news and opinion content.

Loss of advertising revenue
 
The internet displaced news publishers from their central role in the sale of classified and display advertising by giving businesses new and arguably more effective advertising options. Where once property, job, used car and other listings were placed in a newspaper, these and other classifieds are now placed on dedicated online sites like AutoTrader, Gumtree and Rightmove.
 
Display advertising was the next to go as consumers stopped buying newspapers and started spending more of their time online (see Print advertising hits structural wall [2015-071]). The result has been a massive decline in advertising revenues at print newspapers, particularly pronounced in regional news media due to their greater reliance on classified advertising revenue (Figure 5).

However, it is important to recognise that the print ad revenue decline of UK newspapers has been more benign than that in the US (Figure 6). We raise the comparison between the UK and the US throughout this report because the latter lacks a public service broadcaster on a par with the BBC. Indeed, this is one reason why BBC News is so popular in the US.

The amount of contestable display advertising revenue being fought over online by the commercial news publishers – is a fraction of the revenues once enjoyed by newspapers. One reason is that advertisers allocate only a share of their budgets to online and retain a strong attachment to TV, and the other reason is the abundant supply of online display inventory in the UK due to the intense use by 45 million adults of the vast array of media sites, Facebook and other social media platforms. This inventory is typically sold or “negotiated” by sales teams in the first instance, just as print is still sold, with remnant inventory placed in an advertising exchange. Revenues from negotiated sales in 2014 still exceeded those from “programmatic advertising” sales (Figure 7), but the trend is unmistakably to increase the role of programmatic. Automated trading effectively brings all inventory into play, which depresses the average price at which it is sold. Furthermore, the particular context and relationship between the site and audience are largely ignored by automated trading mechanisms. This pushes all online inventory towards lower CPMs.

In order for news publishers to make meaningful revenues from online display advertising in this environment, two things are necessary: a large audience that spends a large amount of time on their site, and the capacity to deliver an identifiable audience to advertisers by gathering and analysing large quantities of user data. Facebook is a potent competitor on both counts: the number of news site users and the time they spend on news sites pales into comparison with that spent on Facebook, which is able to offer advertisers a precisely defined audience due to the information willingly provided by its registered users.According to our estimates, Facebook realised £510 million in display advertising revenues in 2014, compared to £2,715 for Google (including search), out of a combined total of just over £7 billion. In comparison, MailOnline, arguably the top consumer-focussed news publisher online in the UK, realised just £62 million in revenues in 2014. This massive gap between the revenues of Facebook, Google and MailOnline underscores the scale of the challenge facing UK news publishers seeking to survive on online revenues alone.

Difficulties charging for news online News publishers have found it difficult to charge for news online. The simple reason is the immense supply of news content that is good enough for most people’s purposes and free at the point of use. This then undermines the ability of other news publishers to charge for content. As time has gone on, consumers have developed expectations that news will be free at the point of consumption. Even the language adopted by the industry is instructive. “Paywall” has more negative connotations than “membership” or “subscription” or retailer signage such as “Please pay here”. At the root is a ‘collective action’ problem: if one publisher charges while most of the others remain free, that publisher’s traffic and ad revenue will collapse, they will gain some digital subscribers, and other sites will gain traffic and ad revenue. Or think about it the other way round: if every news site available to UK users put a paywall around their content tomorrow, one site could ‘defect’ from that strategy, go free and ad-funded, and take a massive share of traffic. Even if the UK newspapers could collectively agree to put up paywalls, US sites and UK broadcasters’ sites would share the UK’s audience. If content is free to read, then it can be more effectively distributed across the full range of online distribution channels: news aggregator apps and websites like Google News, but also crucially social media like Facebook and Twitter. Because the marginal cost of distribution online is zero, sites can build colossal audiences with a free model, and at such scale fund themselves by advertising revenue, even though the ARPU is often paltry (see Figure 9).

Such scale is particularly achievable for English language sites because of the enormous size of the English language market. Two UK newspaper brands – The Guardian and the Daily Mail – have led the way here, expanding into other English language markets like the US and Australia. MailOnline for example reported £36 million in online revenues from its global audience of 13 million unique daily browsers in H1 2015. Equally, some US brands are expanding into the UK: BuzzFeed, Vice and The Huffington Post stand out here. A handful are expanding into India too.

How publishers are responding to online’s difficult economics Some newspaper publishers are looking at news online and deciding the game isn’t worth the candle. Online news publishing is a completely different business to print news publishing. The business models online are distinct from those that led to success in newspapers and require a new range of capabilities – in technology, data analytics and digital journalism – requiring upfront investment and often posting initial operating losses. Online offers a very different perspective to publishers who bought newspapers because they were profitable businesses that generated substantial cashflows. Certain newspaper publishers view their digital operations as a means of holding up (more profitable) print circulation. Placing a paywall around a newspaper’s full array of content online and offering readers a print and digital bundle seems to have slowed the rate of print circulation decline at some titles. The New York Times is currently trying to pull off this high-wire act: even the most powerful consumer news brand in the world, with a domestic market more than five times the size of the UK, is finding it challenging. The downside of this strategy is that it inhibits the news brand’s ability to build a new business model contoured to the very different economics of news online, and leaves it vulnerable to eclipse online by digital-native sites unencumbered by the need to hold up newspaper circulation (as well as by legacy costs like printing facilities, pension obligations and so on). News publishers are also changing the kinds of news they produce. A site whose revenue comes overwhelmingly from advertisers buying the attention of its readers will tend to produce content of a quality sufficient to attract attention, but not much more. The result is much ‘clickbait’, designed to cynically manipulate the reader into giving their attention to an article. US digital-native publisher BuzzFeed’s success is built on creating content that is shared by gigantic numbers of people on social media. Because advertising ARPU is so low online, the articles need to have very broad appeal – often across multiple markets. Because the product is the audience’s attention, the content just needs to be good enough to attract that attention – no better. It doesn’t look like this funding model is going to sustain much high quality coverage of UK politics. Many news brands are resorting to ‘content marketing’ – i.e. accepting payment from advertisers or brands to feature content created by the publisher or advertiser, often which looks like or otherwise tries to pass itself off as ‘normal’ content produced by the editorial team. Some publishers have already created their own content studios to create it for clients – in effect a part of the newsroom which produces editorial-like content for commercial clients. At some, there is no clear editorial/advertising newsroom divide. How clearly these articles are marked as being paid for by advertisers varies. See Content marketing: publishers’ saviour? [2015-057] for a discussion of these issues. There is an additional problem specific to news origination: the unique value of an original news story in a print newspaper is destroyed since online allows any news story a site publishes to be copied instantly by its rivals. In most cases, they will write up their own version of the story and link to the site that broke the story, but in some instances sites have been known to copy stories without attribution, and even plagiarise articles wholesale. The incentive to produce original news to drive consumption has been reduced. In effect, news publishers are able to capture a smaller share of the value generated from news origination. Even if a news story is behind a paywall, a free, ad-funded rival can put together its own write-up of the story within minutes. Of course, it may still be worth producing some kinds of original news stories if the traffic they would generate for the site would still be worth the cost, or if there is brand value in being seen to do a certain amount of original news. The point is that it has become less profitable for news publishers to originate news, and strong reasons to think less will be done as a result. The ease with which anything newsworthy can be copied by rival sites produces a move towards forms of content less able to be copied – journalism where the value resides less in the basic information conveyed and more in the way it is presented or written – video, graphics, long form writing to some extent. Some newspapers are drifting towards the magazine format online. The lower profitability of news online also shifts output away from more costly stories. Foreign and investigative reporting, coverage of subjects which require specialist knowledge like science, economics or law, will suffer. Local news is also particularly troubled. Its appeal is inherently limited by geography, and so will find it difficult to generate the scale necessary to be funded purely through advertising revenue. Equally, putting paywalls around local news content may just lead users to consume less local news content and more of other abundant free content. True, digital technology has made production of many kinds of content cheaper than ever before: smartphones take pictures or video; social media allows information to be ‘crowdsourced’; data is easily acquired and illustrated by charts. Journalism is probably easier to do and cheaper in some ways.

The number of journalists employed in the US is shrinking (Figure 11); the same is happening in the UK, but we lack reliable data. Those journalists who still have jobs are having to produce more output each, inevitably leaving less time for original reporting and fact checking. Meanwhile, many laid-off newspaper journalists are entering an industry which will pay more for their skills: public relations. The ratio of public relations specialists to news reporters and correspondents is now nearly five to one in the US. Again, there is a lack of UK data but we have no reason to think the situation is much different here.
 
Is the BBC crowding out commercial competition?
 
This section examines certain claims as to how the BBC is ‘crowding out’ made by the commercial newspaper sector’s traffic or revenues. Specifically, it examines:

• - The nature of the BBC’s advantages over other news publishers

- Whether the BBC is damaging commercial sector advertising revenues

- Whether it is undermining the commercial sector’s ability to charge for its products

- The role of the BBC in the local press’s difficulties

The BBC’s advantages over other news publishers
 
Over a decade ago, when BBC News launched, the BBC had a substantial head start over newspaper brands in the race to build an online audience. Its brand was universally known thanks to the nightly TV news programmes that gave it (and still do) a larger audience than the print readership of most, perhaps all, national newspapers. It has been internationally renowned for decades because of the World Service. Its public purposes require it to serve all parts of the UK’s population, and regulation of its content for impartiality aids it in doing so.
 
By contrast, national newspapers have consciously pursued a comparatively narrow but strong appeal in order to persuade consumers to buy them regularly, and in order to sell a defined audience to advertisers. In the online environment, where business models generally require accepting lower ARPU but building huge scale, the BBC has not needed to adjust its editorial model as radically as many newspapers are having to.
 
The BBC had further inherent advantages. Publicly funded through the licence fee, the BBC was able to see only opportunity online, not a threat to its profitability. One of its public purposes has been to spur take-up of new technologies, and the BBC invested more seriously in building a news website at an earlier stage than most (but not all) national or local newspaper publishers. Rather than having ‘imperial ambitions’, the corporation has simply sought to fulfil the objectives set for it. As a publicly accountable institution, it can do no more or less.
 
The BBC may have had a head start in the online race, but some newspaper publishers are now catching up. MailOnline almost matches the scale of the regular audience for BBC News. Newspapers have invested in digital capabilities, making efforts to broaden their appeal – for instance through adopting a more pluralist editorial model than they had in print – and building much bigger scale, including expanding into other English language markets.
 
The corporation’s funding has been cut in real terms over the last five years, and the government has already decided that it needs to be cut much further over the next five years. Although the amount spent on news, sport and weather content online rose in the most recent year, the increase came after several years of it being essentially flat (Figure 12). The evidence for ‘imperial ambitions’ is lacking. Increasing competition from the expanding US brands and its recent difficult funding settlement mean its share of news consumption is much more likely to go down than up over the next few years.

The BBC’s impact on commercial sector online advertising revenue
 
A characteristic of the internet as a medium is that it represents, unlike TV time which is tied to home/couch time, a truly incremental expansion of time devoted to media in the average person’s day. The always-on experience delivered by a smartphone is amongst the reasons why average adult online consumption attained 89 hours in March 2015 (Ofcom), while interfering little with time devoted to work, sleep and TV. This market expansion has meant that sites can each gain audience, without a zero-sum game being played for audiences.
 
The internet removes many of the constraints that limited news consumption in the offline world of radio, TV and newspapers. Users may augment and redesign their media diet entirely by accessing a wide diversity of news sites, aggregator news sites like Google News, or social media platforms like Facebook where users post links. 
 
Wider choice leads to greater variation across individuals in the exact mix of news genres consumed. Some may consume an awful lot more news throughout the day instead of twice or three times. Because the number of news outlets is so wide, and much wider than what comScore calls “news sites”, it is in fact impossible to say whether news consumption as a whole across all media is rising or shrinking in the UK thanks to the internet. Many consumers enjoy the wider choice of news sources, among the tangible benefits of the internet.
 
This swelling audience for online news will naturally lead to more inventory being made available on commercial news sites. However, the CPM of that inventory will be impacted by the rising share sold through programmatic, as was noted above.
 
In this context, what might the Green Paper’s “crowding out” mean? While the government has not defined the notion there, the BBC might be attracting an audience that would otherwise dwell more on commercial sites and allow them to generate more advertising revenue.
 
There are three reasons to doubt this.
 
First, BBC News is not a close substitute for the service offered by commercial news publishers. Many consumers rate BBC News more highly for trustworthiness, impartiality and quality. According to a survey from Ofcom, 59% of the population claims to consult the BBC for their online news, compared to 18% consulting Google and 17% consulting Facebook. For many UK adults, the BBC is their only news source, and might simply consume less news if the BBC is not available to them online.
 
Second, some of the traffic other publishers currently receive comes from the BBC’s news site. Since the independent review of BBC Online in 2005, the service’s licence conditions set by the BBC Trust contain a deliberate policy of linking out to other publishers’ sites where possible, and the Trust assesses its performance in this regard. Whatever substitution of BBC News content for that of other publishers goes on must therefore be balanced against the traffic the latter gain from being linked to by the BBC.
 
Third, some of the publishers best placed to take advantage of the BBC’s retreat from online news are UK newspaper brands, others are not. Plausibly, The Guardian, which specialises in harder news than MailOnline, would benefit to some degree, as would aggregators and US brands currently expanding into the UK market. Many of these are very serious about building up their UK operations: in the last year BuzzFeed, for instance, has hired the editor of the Guardian website, its special projects and news editor, the comment editor and an assistant comment editor from the Telegraph, an assistant editor from the Sunday Times, and another Sunday Times journalist who won Journalist of the Year in 2013. It appears to have intentions to expand into the provision of regional news. Clearly it is serious about competing for a large share of UK news traffic.
 
However, it has to be conceded that the traffic windfall from the BBC closing its news site might well improve the position of some UK news publishers. Expanding the supply of online inventory will expand associated revenues to some degree. At the same time, it is implausible that the closure of BBC News would alter the low ARPU of online news nor solve any of the core business model problems we have already outlined for newspaper publishers.
 
The BBC’s impact on commercial sector subscription models
 
The charge that the BBC is responsible for the difficulty of charging for news online has been made repeatedly over the years. In his 2009 MacTaggart lecture, James Murdoch, then responsible for News International newspaper titles The Times and The Sunday Times, argued:
 
“Dumping free, state-sponsored news on the market makes it incredibly difficult for journalism to flourish on the internet. Yet it is essential for the future of independent digital journalism that a fair price can be charged for news to people who value it. We seem to have decided as a society to let independence and plurality wither. To let the BBC throttle the news market and then get bigger to compensate”
 
It is possible that the presence of BBC News reduces consumers’ willingness to pay for news behind a paywall, as we suggested in our report New phase for news brands [2015-016]. The core difficulty, however, resides elsewhere: the viability of free, ad-funded news sites, particularly in the English language, together with the massive supply of content from other sources.

This is not to say that a paywall strategy cannot ever work. One outstanding example of a successful transition to digital is the Financial Times: in 2014, total circulation grew 10% year-on-year to nearly 720,000 across print and online. FT.com subscriptions grew 21% to almost 504,000, with digital now representing 70% of the FT’s total paying audience. Behind this success, we would argue, is a fairly unique set of factors:

• - The FT’s model is to sell high quality, accurate, timely journalism about subjects which consumers aren’t interested in, particularly the financial sector, to business subscribers who have a high willingness to pay for the service

- The majority of digital subscription growth is due to corporates, without which the FT would find it harder to charge £280 for regular and £380 for premium subscriptions

- The FT is able to further monetise its business subscribers by selling them events, special reports and also selling the typically wealthy audience’s attention to advertisers for its supplements

Politico has a similar hybrid model: about 40% of its revenue comes from subscriptions to its high quality, in-depth coverage of political and regulatory developments sold to businesses for thousands of pounds, and the rest of its revenue comes from events for those businesses and from advertisers seeking to reach its wealthy, influential audience. So the FT cannot be used as an example of a successful digital consumer-focused news business.
 
If BBC News online disappeared tomorrow, more people might well pay for a digital subscription to The Times, but the vast majority would go to the huge plethora of free, ad-funded news sites available. Even if the subscription model is viable online for some, it will not fund consumer news. It might fund information services for businesses that offer bespoke content – the FT/Politico model – but consumer news is instantly replicable.
 
The 6% share of the population paying for news is lower in the UK than many other countries (Figure 13); however, it is not radically lower and seems to be uncorrelated with the presence of a public broadcaster in the national market.   

Crowding out local newspapers
 
The UK’s local press has made the ‘crowding out’ argument forcefully over the years. The BBC had a head start in online news provision and it is possible that the BBC had a negative impact on the audience of certain local news sites until the policy of linking out to those sites was formally implemented. There is no doubt that a new supply of licence fee funded local news gathered by the BBC will significantly increase the challenges faced by local newspaper digital services, which produce news stories that are only of interest to local audiences.
 
Three developments have reignited the issue of local news provision by BBC News:

1. James Harding, Director of BBC News and Current Affairs, author of a report on “The Future of News” issued in January 2015 said: “Devolution and the decline of the regional press are creating a real need for local news coverage: the BBC is going to have to do more to provide local news that properly serves all parts of the UK.”10  The report justifies the expansion of the BBC News’ local provision by pointing to the extent of local newspaper closures, reduced frequency of titles (daily to weekly) and the (alleged) 10 year loss of some 5,000 journalists
2. The Culture, Media and Sport Committee (CMSC) report on “The Future of the BBC” published in February 2015 said “the BBC potentially could have a key position in helping to sustain local media organisations through a more collaborative approach to the industry” and recommended “extending the BBC’s independent production quota to cover local news.”
3. James Harding responded that the BBC had “promised to improve attribution of stories which originate in local papers and agreed to a formal audit of how many BBC website stories originate in the local press. We have suggested other news organisations might consider covering such things as sport and courts for the BBC, we have hosted an industry event on data journalism and we are exploring joint ventures in local areas during the General Election campaign.”

If local news is one area where the BBC is planning to expand, then it could become more threatening to local newspaper businesses. Back in 2008 we were deeply concerned about the implications of the BBC’s proposed local video initiative (see Local media and BBC video [2008-107]), which was subsequently and robustly rejected by the BBC Trust.
 
Local media have long alleged that the BBC has filled its local radio, local online and local TV services with stories originated by local newspapers without attribution. James Harding tells us that the BBC intends to address this problem, and more broadly will support local media through its website.
 
Overall, though, we consider the disruptive effects of online on the news business model to be a far greater issue for local newspaper publishers than any impact from BBC activities. We addressed the scale and breadth of challenges in the local media sector in our recent report Local media: new structures emerging [2015-032].
 
If the BBC is crowding out commercial news suppliers, is this justified?
 
Our report highlights that we do not believe the BBC’s online activities have had or are having a material impact on the newspaper industry’s ability to generate revenue from either online consumers or advertisers. The causes of their problems are much larger than the BBC.
 
However, what has been lacking in the debate so far is some recognition that even if there were evidence of a negative market impact on certain commercial news publishers, that impact needs to be weighed against the various public benefits, which the BBC’s presence in online news delivers. As the DCMS-commissioned Graf review published in 2004 pointed out: “no single number (such as the amount of commercial revenue that may have been displaced by BBC Online) can capture the extent of market impact.”
 
BBC News could still be of considerable net benefit to the public even if it gathers audiences that might possibly devote their attention to commercial sites if BBC News was simply not there. Three benefits in particular stand out:

• - The supply of ‘hard news’

- The consumption of hard news among the UK population, with beneficial downstream effects on political engagement and turnout

- The consumption of BBC News in the world, boosting the UK’s global influence and soft power

Supply of hard news
 
There is no doubt that the BBC performs well its role of gathering and presenting ‘hard news’. As a publicly funded institution with defined public purposes, the BBC is able to focus squarely on what is socially beneficial. Society clearly benefits from hard news provision in a host of ways, and the BBC invests in its provision untroubled by the problem of a return. Moreover, the resources devoted to the site also help TV and radio news services, and conversely.
 
Hard news for consumers is a segment that few commercial publishers have chosen to contest. Commercial publishers find hard news expensive to produce and it attracts no higher a CPM than soft news and entertainment, replica news or clickbait, which are much cheaper to produce.
 
Another casualty would be the plurality of media. As noted in the introduction, BBC News is the sole source of professionally produced impartial, quality, independent news in the UK, and is not substitutable by commercial news sites, even to an imperfect degree. Scaling back BBC News would appear absurd at a time when commercial hard news provision is so troubled.
 
Consumption of hard news
 
As already outlined, scaling back BBC News online would deny many people their preferred news service. Given the importance of news consumption for political knowledge, and the importance of political knowledge not just for informed voting but for electoral turnout altogether, we think the government should be extremely cautious about doing anything that could lead to that outcome.
 
If BBC News online is scaled back, the UK also weakens a major source of its soft power around the world, at a time when other state funded news organisations like Russia Today and Al Jazeera are expanding.
 
The report of the House of Lords Select Committee on Soft Power and the UK’s Influence from 2014 mentions the BBC 207 times. Instructive quotes are:

• - “Soft power involves working to affect the preferences of others by using networks, developing and communicating compelling narratives, establishing international norms, building coalitions, and drawing on the key resources that endear one country to another”

- “National broadcasters are often seen as a ‘soft power asset’ because they increase international awareness of a country, and promote understanding in their audiences about that country’s story, values, people and aspirations, as well as furthering other aspects of the country’s international agenda (such as encouraging development)…The fact that the BBC can bite the hand that feeds it occasionally means the BBC is seen as credible rather than as propaganda. You do not see that with the Chinese media broadcasters”

This does more than bring the UK to the world since it also drives people to buy UK goods and services, including through tourism. The UK is also the second top exporter of audiovisual products and services, behind the United States.
 
Why do BBC international services appeal?

• - Quality: the BBC Trust has laid out guidelines for the BBC’s public service remit to bring the UK to the world, which emphasises the accuracy, impartiality and independence of its news as the primary value. The BBC stakes a claim to being the most trusted news organisation globally

- Supplied in English and 27 other languages: To optimise its reach globally, BBC.com is supplied in English and 27 other languages, including Spanish, French, Portuguese, Arabic, Hindi, Russian and Mandarin

• - Multi-platform and multi-device: The BBC has created dedicated apps to allow its services to be consumed across connected devices, including smartphones, tablets, computers and connected TVs

Conclusions
 
If news consumption is in large part destined to occur online, as we believe it is, then eliminating or scaling back BBC News will irreparably damage the supply of hard news, the plurality of media, and the quality of political and societal debate in the UK. It could also damage the supply of TV and radio news.
 
For those who believe that public opinion should be fought over by commercial news publishers alone, as is the case of the US, then a world without BBC News will be seen as a positive outcome. Some suspect BBC News of an innate and unacceptable left-wing bias, despite the conditions of its service licence and the absence of evidence.
 
This is not to say that the BBC has no ostensible stance: part of its public purposes require it to be independent of the party in power and the government of the day. It follows that if the government is sincerely concerned about the problem of BBC bias, its focus should instead be on ways of making the BBC less accountable to the government of the day and more directly accountable to the people of the UK.
 
The BBC Trust has intimated in its initial response to the Green Paper that it will conduct full Market Impact Assessments (MIAs) on, for example, online news, entertainment and drama. Ofcom has developed a methodology for MIAs used to assess BBC proposals for new or expanded services, which it has deployed since 2007 under its statutory duties on a number of Public Value Assessments (PVAs) conducted by the BBC Trust. None of these MIAs have concerned BBC News online, and the BBC’s plans for local video services were rejected.
 
An objective and professionally conducted MIA for online news by Ofcom will provide vital evidence to the government in the Charter Review. Ofcom’s methodology could be repurposed to address the question of whether a scaling back of BBC News online will produce a net positive market impact on consumers and producers. This is the evidence the government needs to obtain prior to deciding whether the BBC News online should be scaled back.

This report is published with thanks to Enders Analysis