Whittingdale Attacks ‘Protection Racket’ Ad Blockers
Culture Secretary John Whittingdale has branded ad blockers “a modern day protection racket” in a wide-ranging speech in which he also spoke at length about the BBC and the need for better partnership with the commercial sector.
Delivering the opening keynote at the Oxford Media Convention, Mr Whittingdale attacked ad blockers and said that consumers did not dislike online advertising although overly intrusive online ads should be avoided.
Mr Whittingdale said: “Some of the ad-blocking companies are drawing up their own rules of acceptable advertising or offering to white list providers in return for payment. Many see such practices as akin to a modern day protection racket.
“This practice is depriving many websites and platforms of legitimate revenue. It is having an impact across the value chain, and it presents a challenge that has to be overcome. Because – quite simply – if people don’t pay in some way for content, then that content will eventually no longer exist. And that’s as true for the latest piece of journalism as it is for the new album from Muse.”
Mr Whittingdale said he was planning to host a roundtable with interested parties to discuss the issue.
In his speech, Mr Whittingdale also spoke at length about the BBC following the publication of two reports – one by Sir David Clementi looking at how the BBC is governed and regulated and another by Oliver & Ohlbaum and Oxera looking at the market impact of the BBC – this week as part of the Department for Culture, Media and Sport’s review of the BBC’s Royal Charter.
Mr Whittingdale said the market impact report showed that the BBC could “could do more to enhance their net impact” and make a positive contribution to a robust and healthy news media ecology in the UK.
Mr Whittingdale continued: “And it cautions against the idea that the current positive market impact is a justification for future expansion. One simply doesn’t cause the other. In fact, the report suggests that the BBC could be a better partner by working more collaboratively with the sector.
“I don’t think it’s particularly controversial to say that the BBC’s partnership record is fitful. Excellent at times. Falling short at others. And – as the BBC themselves have admitted to me – partnership is too often something they’re seen to do to people rather than with them. This is something that needs to be addressed.”
The report found that the BBC’s “large footprint” was “bound to have an effect on the commercial sector” and that the existence of the BBC News website could be responsible for diverting up to £89 million away from the commercial sector each year.
The existence of “soft news,” the report said, on the BBC News website could have an impact on the commercial sector of up to £8.2 million each year and that could be even higher if other parts of the BBC website were taken into account.
The report added: “We consider that there is scope for the BBC to explore a more radical approach to aggregating other news publishers’ content, relying on links to other publishers for content that audiences might not necessarily associate with the BBC.
“This would address the concerns raised about soft news – particularly in connection to news consumption mediated by social media – while the BBC would continue providing a “balanced news diet” to its regular visitors.”
Sir David Clementi’s report looking at the model of governance and regulation concluded that the BBC Trust model was flawed because it “conflates governance and regulatory functions.”
The Trust should be scrapped, the report added, with regulatory oversight of the BBC passing to Ofcom which would set out an operating framework setting out the obligations placed on the BBC.
An additional recommendation was for the BBC to have a unitary board, with a majority of non executive directors, which would be responsible for the interests of the licence fee payers.
Sir David concluded: “Overall I believe that the recommendations in this Review would add significantly to the transparency and accountability of the BBC. The Corporation would have a unitary Board responsible for all its activities; it would have a single regulator, Ofcom, to whom it would be accountable.”
Separately, the News Media Association this week also published an O&O report looking at the issue of BBC global news reporting and governance structures which stressed the need for transparency in the BBC’s overseas operations.
The report said: “Where the BBC’s licence fee funded resources are being used to underpin competitive commercial ventures – both in the UK market and overseas – a high level of transparency is desirable to ensure that each commercial venture is paying a fair market price for its access to public service resources.
“Further, the rationale for the BBC’s commercial ventures should be that they return benefits to the UK licence fee payer – either in terms of the direct funding, content or services available within the UK, or as the most cost effective route to achieving the BBC’s broader aims of representing the UK in international markets.”
The report identified key areas of cross subsidy between the BBC’s commercial and public service operations including content, UK and international newsgathering, commissioned programming, the BBC’s news archive, office space and IT services, the BBC brand.
“It may indeed be that, while cross-over exists in these areas, they are all charged to BBC Global News at market rates and thus no cross-subsidy exists and no undue commercial benefit is accruing to BBC Global News as a result of its relationship with the licence fee funded BBC News.
“However, without more detailed public reporting of transfer pricing arrangements and the approach to benchmarking these specific areas, it is not possible for the BBC to demonstrate that this is the case to licence fee payers and other participants in overseas news markets.”