Why rivals want BBCi to be a victim of its own success

Back in the Nineties, when the term “internet profit” was not thought to be an oxymoron, a senior BBC executive addressed a new media conference. In the audience were a number of ponytailed US web whizkids, many of them called Steve, still revelling in the fact that they were suddenly darlings of the business world.

What, they were fascinated to know, was the BBC’s business model in setting up its online offering. The corporation’s man looked perplexed.

“Actually,” he said, “they just told me to go away and make the best news website that I possibly could.” Business models didn’t seem to come into it. The Steves shook their heads in amazement and went away to squander some more of their venture capitalists’ money.

Meanwhile, BBC Online, as it then was, did just what it had been asked and created a news site that would become the envy of its commercial rivals.

Fast forward a few years and the BBC’s approach is under somewhat closer scrutiny. While the Steves are back serving behind the McDonald’s counter, former Trinity Mirror chief executive Philip Graf has been asked to conduct a review into the corporation’s online operation. Not a moment too soon, its rivals say.

They believe that their own efforts to turn a profit have always foundered on the rock of BBCi’s gigantic resources, which underwrite a comprehensive news service that’s free to anybody with an internet connection.

How, they ask, can Guardian Unlimited, say, or even the Financial Times, charge for their mainstream news reports when the corporation’s mighty news machine rumbles on? Graf will have a complicated task on his hands, sorting out just how the £110m or so that the BBC spends on the net (£20m of it on news) is distorting the market. More than one third of its news users, for instance, do not visit any other news site.

The BBC has already pre-empted the review, commissioning KPMG to do its own research, which shows that up to two million people would not be web users anyway – and therefore not spending time, and potentially money on other websites – if it wasn’t for the BBC.

And new media boss Ashleigh Highfield had his own message for commercial players wanting to charge for news. His advice to them, given to The Independent, was stark: “Give up and move on”.

They’ll be hoping Graf offers a few more crumbs of comfort than that.

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