British Music Rights welcomes the opportunity to respond to OFCOM's review of Public Service Broadcasting (Phase 1). We have considered the conclusions to the report on the effectiveness of the current system of television broadcasting on the five main terrestrial channels; and the propositions outlined by OFCOM on maintaining and strengthening PSB in the future. This paper follows a Music Business Forum submission to OFCOM in March 2004.

Commentary on the Phase 1 Report: Is television special?

We broadly support the four key purposes of PSB identified in the report (paragraph 147).

We believe that public service television should provide effective platforms for the broadcast of British music in an accessible way to the widest possible audience, whilst celebrating the range and diversity of music genres and the different tastes and preferences of all ages.

Although we recognise that new technology is enabling consumers to develop their own programme scheduling and that this will become more prevalent in the future, we share OFCOM's concern that increased competition in the broadcasting market place is invariably pushing the more challenging programming towards the periphery. The issue of specialist topics, such as the arts, being increasingly marginalised from peak viewing hours is a matter of concern for the cultural health of the UK and a commitment in this area of programming should be addressed as part of the 'educational' component of PSB.

Whilst we are pleased that OFCOM acknowledges the limitations of a genre based analysis of output (paragraph 41), we would express that there are both opportunities and threats from there being a broad definition of special programming for the sake of inclusiveness. For example, by engaging in arts programming with an entertainment dimension to simply stem the decline in arts scheduling and gain audience share may ultimately take something away from the core value of programming itself because of the dilution. On the other hand, if there is a way to enhance the reach of (diverse) music to new audiences through innovative arts entertainment programming, then this should be explored.

As a new framework is being contemplated around the purposes and characteristics of PSB, broadcasters must be held accountable by OFCOM given the changing nature of their obligations. In terms of arts and music provision specifically, we look forward to the broadcasters explanations in terms of their range of format, and programming (including subject matter). In particular, the manner in which programming reflects the diversity and tastes of the UK's communities is of crucial importance.

We are pleased to note that OFCOM acknowledges in its recent consultation on guidance notes for broadcasters that some programmes may contribute towards public service provision in a number of different ways, and may not easily fit within narrow genre definitions.

We welcome the BBC's Statement of Programme Policy suggesting that there is room for further improvement on quality and distinctiveness (paragraph 43) and look forward to this being reflected in years to come. In terms of music provision, we would like to see a renewed commitment to playing UK-originated material. Furthermore, we would also like to suggest that a new channel be created to promote new music, across all genres. At the very least, there should be redoubled efforts to source and broadcast new music on all existing channels.

We believe that the editorial remit of the BBC should allow for the testing of boundaries and the expansion of coverage, with newly-composed and newly-recorded music getting the airplay it deserves, particularly from diverse communities and areas in the UK.

We believe that PSB's should play their part in terms of a broad commitment to education. Their role should also embrace the ways in which young people can learn to appreciate how creators of, and investors in, music and other copyright works are able to build and maintain careers and businesses in the creative industries.

PSBs have an important role to play in not only helping to present and use the diversity of work that is available, but also in educating the creators and the creative entrepreneurs of the future and their audiences about the importance of creative people being able to earn a living form the use of their work. An awareness of copyright and other intellectual property rights is an important part of business awareness for the future. PSBs also have a duty, in their dual roles of educating and informing, to promote this type of media literacy.

As part of OFCOM's strategy and priorities for the promotion of media literacy, there should be an education awareness programme to communicate to the public, what is meant by the term and concept of PSB. The recent DCMS exercise as part of the BBC Charter Review consultation process demonstrated a way of effectively engaging younger audiences in the process. OFCOM should give contemplation to such initiatives.

In relation to OFCOM's assertion that we 'do not direct large scale public funding towards those industries" (paragraph 150), we note that the Secretary of State for Culture, Media and Sport, Rt. Hon Tessa Jowell MP reflected upon the licence fee as "the nation's venture capital for creativity" and we strongly support the view that there are wider social economic and cultural benefits to gain from direct PSB provision. OFCOM's qualitative assessment of PSB should also include an estimate of any potential qualitiative loss of this kind resulting from proposed changes to the PSB framework in the UK.

As in our previous submission, we emphasise that music has the power to inspire; the ability to transcend social barriers and can be used as a key vehicle for enhancing social inclusion; can reach diverse communities; as well as being an avenue for promoting cohesive communities. We also note that given these qualities, music could play an important role in supporting the delivery of the further goals outlined in relation to democracy and citizenship (figure 5).

Music Business Forum: Responses to OFCOM's 10 Propositions on PSB

Proposition 1: We need to examine the prospects for PSB funding and the case for seeking alternative resources. The existing commercial funding base for PSB is being eroded. Popular support for the TV licence fee may be jeopardised by increased audience fragmentation. So, new forms of explicit or implicit funding or support for PSB need to be considered for the longer term. These should include areas such as electronic programme guide (EPG) positioning, digital multiplex access, commercial TV's payments to the Treasury and other possible incentives.

With respect to the increased audience fragmentation and consumer choice available, we believe that this places even more importance on the need for the BBC to deliver in terms of its role as the PSB standard setter.

As part of the general aspiration of public access to culture, there is an obligation to support public service broadcasters to reach out to wide range of audiences in order to help build our social awareness and communicate and strengthen our ever evolving cultural identity. The BBC's role and responsibilities in relation to Freeview is an interesting example of their commitment to promoting accessibility to services in the fast changing digital age.

In terms of PSB funding, we currently support the indirect and politically independent funding of the BBC through the licence fee. This funding mechanism should enable the BBC to be more innovative, editorially independent and therefore more able to maintain its integrity. Moreover, this should be the basis of maintaining and strengthening PSB for the many qualities it brings the broadcasting environment, particularly in terms of the wider, social and cultural objectives.

With respect to any additional support and resources for PSB beyond the BBC, this is welcome. There should be the explicit proviso that any funding support mechanisms proposed should not jeopardise the existing pecuniary support for the BBC.

We endorse additional support for PSB in principle. In relation to EPG's, we expect that the Code of Practice will take into account 'appropriate prominence' and thus permits a measure of discrimination in favour of PSB channels. Prominence should not be determined by audience share alone and it should be considered unreasonable that 'arts' programme which attract relatively low audience shares are allowed to fall down the list because of their non mainstream ratings, given their educational significance. This can only perpetuate their decline and should be avoided.

In addition, the BBC should itself undertake a commitment to signpost their public service broadcasting competitors through the medium of television, and beyond, via its website. Other PSB's should also be encouraged to support the PSB provisions of the BBC, where appropriate.

Proposition 2: Competition in the provision of PSB is at the heart of an effective system. In a digital world, a single, monopoly supplier of PSB is unlikely to be the most effective model for delivering PSB purposes or characteristics, or for securing plurality of views and perspectives. We need to examine the case for sharing existing funding streams among a greater number of broadcasters and allowing broadcasters or producers to bid for PSB funding.

We firmly believe that at the heart of PSB are the provisions offered by the BBC. Only the scale of a provider like the BBC can ensure that PSB delivery will be realistically achievable in a digital age. We therefore reject the notions that competition in the provision of PSB is at the heart of an effective system, and the supposition that a monopoly supplier is unlikely to be the most effective model of delivery.

In relation to competition in PSB, precedent in other countries (see note 1) has suggested that there is only increased choice within a very narrow range of programmes, and therefore a definite consumer and citizen disbenefit.

We believe that PSB delivery should be considered in terms of its overall effectiveness, rather than simply cost efficiency, as recognised by OFCOM in its desire to produce a qualitative assessment. As mentioned before, a 'loss assessment' would be a useful instrument for OFCOM to consider.

PSB provision should have a regional and communal scope as there is a wealth of talent and diversity which exists at all levels of UK music making. This deserves to be heard and we look to PSB providers to facilitate this through their platforms.

Issues concerning funding are considered under Proposition 3.

Proposition 3: Where public funding is necessary to secure the purposes and characteristics of PSB, different means of distributing funding should be examined. One option is to continue with direct allocations to designated broadcasters. A second is to make allocations through a new intermediary (a 'purchaser' of PSB) with either broadcasters or producers as recipients ('providers' of PSB). Both options need to be assessed as we consider the best model for delivering PSB in the digital future.

In terms of contestable funding, we believe that this would prove an unworkable solution with significant inefficiency through transaction costs and an additional new bureaucracy. However, if OFCOM intend to pursue this option further, we urge that, given the transitional nature of the broadcasting environment, there should be consideration of trial projects to explore the impact of such a system in practice. We would like to see a further explanation from OFCOM in stage 2 of the PSB review.

Given OFCOM's supposition that PSB provision will become more difficult in a digital age, and with the economies of scale in terms of the production at the BBC, we question the proposition of 'top slicing' the licence fee to provide funding for other public service providers. Instead, we suggest that there should be consideration of 'benefits in kind' system for other broadcasters, such as through the shared use of facilities or training provisions.

We would encourage OFCOM to look to alternative means of support. For example, the recent IPPR 'Public Service Communications' report suggests funding could potentially come from communications providers' spectrum charges, as in Finland (see note 2). This IPPR report also explained that a value of benefits system could provide different stimuli. These should be proportionate to the public service obligations placed on the channel, and would include due prominence on Electronic Programme Guides, must carry obligations on delivery platforms, a reduction in spectrum charges, and ultimately additional public funding, if required. These propositions should be examined further by OFCOM during Stage 2 of the review.

There could also be consideration of encouraging additional PSB funding from other sources, which may include the National Lottery, the Arts Council, Creative Partnerships, and communal, cultural and regional consortia, and other support bodies as a means of showcasing specific musical creativity to regional, national and international audiences.

Proposition 4: We should continue to secure a substantial contribution to PSB by not-for-profit organisations in addition to contributions from profit-making broadcasters. This is because social purposes may be more easily achieved when the organisational aims within which commissioners and schedulers work are closely aligned with PSB purposes, rather than potentially in conflict with them.

We agree that not-for-profit organisations should be actively encouraged to deliver PSB objectives, as well as profit-making broadcasters.

In terms of institutional ethos, we would emphasise that diversity and access are what broadly distinguishes the BBC from commercial broadcasters.

Proposition 5: The market is likely to produce significant amounts of programming which meet both the purposes and characteristics of PSB, and which can be defined as PSB. Some programming (and channels) supplied without public intervention already contribute to PSB purposes. Prior to switchover, we should work to explore how many of the purposes and characteristics of PSB can be provided, without public intervention, by the evolving TV broadcasting market.

It may be expected that the (commercial) market will produce a significant amount of programming which can be construed as PSB. It could well be in their interest to do so if the programming is popular and fulfils the citizens' requirements and needs. Indeed, this is desirable.

However, as explained in a recent speech by Ed Richards (see note 3) to the Westminster Media Forum that the (commercial) market will not deliver enough PSB content, and in a digital world, there will be under provision of programming that meets PSB purposes.

However, it must be emphasised that there is an inherent danger in leaving PSB solely to the market to deliver. Unless there are specific contracts and obligations imposed in terms of compliance which can be reviewed at regular intervals, commercial operators are able to walk away from their obligations. Perhaps there could also be some consideration as to whether commercial broadcasters have a (corporate) social responsibility obligation to produce certain PSB elements.

Proposition 6: Notwithstanding developments in the market, there is a strong case for the BBC to continue to undertake a wide range of activities to underpin the delivery of the public purposes and characteristics of PSB. But its range of activities needs to be reviewed periodically in relation to core PSB purposes.

-Where a high cost of delivery is associated with low viewing figures, it will be harder to justify continued public intervention. Alternative means of funding, such as subscription, should be considered for these services.

-Other activities, including secondary market distribution, studio and other production resources, and indeed production should be reviewed carefully against their distinctive contribution to PSB purposes.

We question the proposition that where there is a high delivery (programming) cost and low viewing figures, public intervention is always more difficult to justify. There may be other key PSB aspirations to consider and communicate, such as social, educational and cultural objectives to equate, not just simply audience ratings.

As mentioned previously (under our response to proposition 3), the BBC gains from economies of scale. Another aspect which should be considered are the cross-subsidisation benefits which the organisation can offer.

We believe that creative traditions and experimentation would be threatened in considering any sort of part-subscription scheme. The concept of subscription payments applying to BBC public service programmes would attack one of the main advantages for the BBC as it is currently funded. That is the way in which the BBC is viewed as providing viewers and listeners with what they want now and what they may want in the future - this surely is a crucial part of the educational element of PSB. If viewers do not have the easy opportunity to experiment with new viewing and listening experiences within free to air broadcast public services, subscription conditions may act as a barrier to experimentation and therefore accessibility to the more unusual or challenging aspects of PSB/BBC output.

It is the range and the diversity of BBC services, provided within an effective public service remit, that helps to provide a secure and strong focal point for a breadth of cultural expression and opportunity. Indeed, the BBC's PSB remit should be considered much wider than simply PSB television. Instead, a qualitative assessment of the BBC should be placed in the wider context of the changing media environment with PSB provisions for radio and online at a local, regional, and national level.

Where the BBC undertakes commercial services, these should be complementary to the public services operated by the BBC, and not undermine or detract from them. We expect that these should really only be developed along the lines of the BBC's PSB core activities, as outlined in the Charter. The impact on commercial markets must be carefully assessed.

There is some disquiet amongst music creators and composers about the aggressive rights acquisition of BBC Worldwide and it was felt that this arm was better placed to concentrate on secondary exploitation, for the benefit of both itself and its creative suppliers.

Overseas broadcast of BBC material featuring music is often an excellent way of showcasing UK talent, under the recognised name of the BBC. However, the choice of granting rights should remain on commercial terms under fair trading commitments. The BBC in its role as public service broadcaster should be a standard bearer for best business practice in this area.

The BBC Governors have responsibilities in relation to the current effectiveness of PSB delivery. As stated in the British Music Rights and the Music Business Forum response to the DCMS consultation on the BBC Charter Review, we believe a Board of Governors should be equally free of influence from government and management in order for it to be successful. However, we also believe that their simultaneous role as both governors and regulators should be re-examined.

Proposition 7: Every programme shown on the main commercial terrestrial channel's schedules need not always reflect PSB purposes and characteristics. In the case of the BBC, however, with its unique and privileged funding status, programmes should always strive to reflect the broad purposes and character of PSB to some degree.

Invariably, not all (commercial) programming will, or should, reflect PSB characteristics.

Although the BBC should aim to strive towards PSB objectives, it would be wrong to completely preclude the organisation from non-PSB purposes through overly prescriptive regulation.

OFCOM should be careful not to threaten the BBC's creative integrity.

Proposition 8: Channel 4 will need to overcome increasing financial pressure if its contribution to PSB is to be viable in a fully digital world. Internal efficiency and self-help must be the starting point. If necessary, a range of alternative options should also be considered, including new commercial initiatives, a share of contestable funding, a new source of direct funding, or a share of the licence fee. In considering these options, Channel 4's distinctive role and ethos should be maintained on a secure footing through its ownership status, covenants and expression of purposes.

Given the public's desire for originality and innovation, Channel 4 could be playing a more important part in the PSB framework. At this moment, we question the necessity of alternative funding options. In terms of a share of contestable funding, see the aforementioned comments under Proposition 3.

Proposition 9: Independent producers make a major contribution to PSB purposes across most programme types. Apart from one or two specialist areas (e.g. news), our supposition is that there is more scope for independent production to enhance the delivery of PSB. Measures that need to be considered include raising the quota of programming which broadcasters must commission from independent producers.

The BBC's role as a commissioner of music is important to the UK cultural, social, and economic life, in terms of fostering and promoting new talent, communicating understanding within and across communities, and ensuring that music is at the heart of our cultural expression. Making programmes is a key element of the BBC's role and should be maintained with no change to the quota of from independent producers.

We think that the success of the BBC in terms of range of programming is very much based on the achievement of 'critical mass' in terms of the BBC's infrastructure as well as the resulting reputation for championing public service programme principles. We therefore think that this 'critical mass' should not be overly challenged by allowing any in-house facility to dwindle to cover only those programmes that no independent company would be willing to attempt to produce.

It is important that any quota provisions for independent production allow for independently produced productions to promote innovation without undermining the BBC's own ability to innovate.

It is important to recognise here the need to fairly reward creative input. Independent producers should have a PSB Code of Conduct which outlines the commitments to fair reward for creative input. This may also consider other important aspects of PSB, such as diversity.

OFCOM should recognise the high level of freelance providers contracted to the BBC. and should be considered as part of measuring the contribution of non-BBC input, with further contemplation of the resulting policy concerns and implications.

Proposition 10: There are many significant challenges ahead. Once digital switchover has been achieved, public intervention to secure PSB may not be justified on its present scale, either because market failures are reduced considerably, or because it will prove impossible to secure the purposes and characteristics of PSB through television at a reasonable cost.

The main problem with this proposition is that the UK market is currently in transition which makes it difficult to accurately predict the future beyond digital switchover. We believe that the broadcasting system should not be radically reformed at this stage but that some trial projects and analysis would be beneficial. OFCOM would then be better informed, and the market further advanced, when it returns to some of these by the time of its next PSB review in five years' time.

Notes:

1. Notably in America, Australia and Italy - as mentioned by Steve Barnett in a recent PSB discussion at a New Statesman roundtable with OFCOM, May 2004.

2. IPPR: From Public Service Broadcasting to Public Service Communications 2004. Chapter on conclusions and recommendations by Jamie Cowling and Damian Tambini.

3. Westminster Media Forum speech (25 May 2004)