How a television monopoly ended in mediocrity

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A licence-fee-based BBC was the guarantor of quality television in a monopoly market. But a licence-fee-based BBC is now the main obstacle to quality television in a competitive market.

British consumers spend about £2bn a year buying 250m books. About 70,000 of the 120,000 titles published each year are aimed at this consumer market. So the average book sells between 3,000 and 4,000 copies and has a budget – including royalties, printing, marketing and distribution – of about £30,000.

Now imagine that you were given a monopoly of the book trade and a modest budget and obliged to make books available free. You would not publish 70,000 titles. You would produce a few high-quality books, finely written and well edited – the sort of books you would yourself like to read. They would still have to be popular: for 2,000 titles to satisfy current demand, each would have to attract 100,000 readers. Since few authors would be published, those who were would become celebrities. Fortunately, you would not have to pay them much because there would be nowhere else for them to go.

If a strong chief executive could resist the inevitable pressure to produce books that were middle of the road and supportive of the established order, you might achieve a reputation for both quality and integrity. People would remember the era of the book monopoly as a golden age, when books were good and readily available.

Now suppose a competitor were allowed to produce free books funded by advertising. He would focus on low-budget titles that would attract large audiences for the sponsors. Fearing that a loss of readership would jeopardise its funding, the book monopoly would follow its rival downmarket. It would justify this by disparaging its former elitism.

Now suppose that all restrictions on book sales and distribution were removed. A savvy newcomer would focus on two business strategies. He would bid away the best-selling authors, whose earnings had been kept down by the monopoly, and produce cheap and cheerful books with large audiences relative to their low budgets.

Intelligent people would hate the results. They would deplore the introduction of competition and market forces into books. They would observe that not only did the new commercial publishers themselves produce low-quality product, but they also debased the quality of the monopoly publisher’s output. They would be right.

This is not a parable: it is the history of British broadcasting. The model of the book monopoly, distributing a small number of carefully selected titles, is not new. Versions of it have been operated by the Catholic church and the Soviet Union. The results were not good. But if the monopoly is administered by upright and disinterested public servants, such a monopoly can, as it did in British broadcasting, offer high-quality products at low prices.

But the competitive genie is out of the bottle and is not going back in. Technology and deregulation have eliminated the scarcity of distribution capability, which once severely limited the number of television producers and required everyone to watch the same programmes at the same time.

Today the fundamental economics of television differ little from the fundamental economics of books. Television is not, in fact, much more costly to make. The average cost of an hour’s programming on BBC1 is £80,000. BBC1 is an expensive network, and the average production cost of an hour’s television on other channels is less than the average production cost of a book.

Most of what is shown in a liberalised television market will be dross, just as most of what is in bookshops is dross. But in due course commercial producers will produce everything for which there is even a small demand. Time Warner’s HBO is now an important broadcaster of the kind of output once associated with the BBC. But it is tough to run a business in a market saturated with free product. You are bound to focus on niches and on low-budget mass-market segments.

A licence-fee-based BBC was the guarantor of quality television in a monopoly market. But a licence-fee-based BBC is now the main obstacle to quality television in a competitive market.

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