The iPlayer is a runaway success . . .but could it backfire on the

0 Comments | Sunday Herald, The, Jul 27, 2008

IT may be a little early to choose the most infl uential development of 2008, but it seems safe to say that the BBC iPlayer will be high on the list at the end of the year.

Just seven months after its launch, the on-demand internet service is now averaging 1.5 million users per week, with more than 20 million requests to download programmes per month.

The latest spurt comes on the back of figures from Virgin Media, which began offering iPlayer over the television to its subscribers in May, and logged 10 million viewings for its first full month in June.

The phenomenon is driving a wider surge in on-demand television over the internet through ITV, Channel 4 and Sky's equivalent services. Five launched an on-demand service last week while Project Kangaroo, the BBC's commercial on-demand joint venture with ITV and Channel 4, will launch in a few months' time pending a competition investigation.

But while this is one of the BBC's all-time greatest successes, it raises numerous questions about the licence fee. Viewers are only liable to pay licence fees for their computers if they use them for live rather than ondemand television. With more and more people opting out of viewing schedules in favour of the iPlayer, the old system for deciding who pays a TV licence is in danger of becoming outdated.

TV watchdog Ofcom said in a report:

"Over the next five years, our analysis suggests linear TV viewing may fall by 20per cent to 30per cent, to be replaced largely by an increased use of on-demand services."

Although there is not yet analytical estimates of how many viewers might ditch streamed television altogether, there is plenty of anecdotal evidence of 20-somethings in flats relying only on laptops and not bothering with television sets.

Add to this the fact that on-demand television over other devices such as mobile phones and MP3 players is becoming more commonplace, and it would appear technology is running the existing licence fee system into the ground.

Mike Thomas, European media analyst at Jupiter Research, said the status quo is not an option.

"There are two possible approaches, " he said. "One is to say there is no need to pay a licence fee for a PC.

"The other is to say the iPlayer is a fantastic example of what a public service broadcaster can do without commercial restraints, and how it can create opportunities for other broadcasters.

"There is a very strong argument that it is a public service success and you should widen a licence fee that is not in line with reality."

Although Thomas stressed nobody has the full answer, this would possibly mean finding a way of extending licence fee charges to on- demand PC viewing along with mobile phones and MP3s, which in turn would raise issues with websites like YouTube.

If you were to charge for on-demand programmes, they would become difficult to distinguish from video clips - a problem that might call for a completely different approach to funding the Corporation. The success of the iPlayer has moved the problem so rapidly centre stage that it is not even being considered by Ofcom in its current review of public service broadcasting.

Other experts like Toby Syfret, a media analyst at Enders Analysis, are not in favour of including internet access in the licence, regarding it as impractical and outmoded.

"That would involve the collection of all sorts of data, " he observed.

Although he did not offer an alternative, he argued that moving away from the licence fee, rather than widening it, would reduce what he sees as an unfair financial advantage for the BBC.

The BBC refused to comment , insisting it was a matter for the government and the licensing authority to decide on. But it stressed the iPlayer was always regarded as an add-on rather than an alternative method of viewing, and it anticipates television will continue to be far and away the main game in town.

If this issue is giving the BBC an unpleasant headache, there are also wider implications with the iPlayer and the licence fee. The Rupert Murdochs of the world might have been calling for it to be scrapped or redistributed for many years on the grounds that it creates unfair competition, but the success of the iPlayer over its paid-for rivals has given them a powerful extra reason for complaint.

Syfret said the loss of revenue to commercial stations in the current market is creating a widening gap between the BBC and its competitors.

"I think that the licence fee is too big at the moment, " he said. "We've got a very difficult advertising market and you now have the BBC coming in as a competitor [on the internet].

"What you have is a funding gap and that is something that is going to have to be looked at when the charter comes up for renewal [in 2012]."

Channel 4 is already lobbying for a share of the public purse to make up for its own funding problems, and seems to be winning the argument. There have been signs for some time that the Labour government favours some kind of redistribution, and the success of the iPlayer is no doubt helping the cause.