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Foreword

This is a discussion document, which is intended to inform and encourage debate around public service intervention in digital media and the concept of the PSP. It is not intended as a formal policy consultation, although we would welcome comments and responses on the issues laid out in this document.

The future of public service broadcasting (PSB) in UK television is central to Ofcom’s remit. Ofcom’s first statutory review of PSB was completed in 2005 and set out recommendations for maintaining and strengthening the quality of PSB against a backdrop of rapid change in broadcasting. The television market has continued to evolve at speed since the review, as a result of which we published Digital PSB in July 2006.

Digital PSB highlighted a number of market developments affecting the future of public service broadcasting:

• The rapid take-up of digital television is reducing the viewing share of the traditional public service broadcasters, and hence the value of the analogue spectrum
• Viewers – especially younger audiences – are increasingly watching content on internet and mobile platforms, and are starting to move away from traditional TV
• Changes in spectrum policy will affect the way in which public service aims need to be financed in the future.

In our view, these changes mean that the delivery of PSB in a fully digital television world needs to be rethought. While the core public purposes endure, the means of delivery and institutional framework may have to change. As a result, the challenge is to define the appropriate model for PSB for the future, not for the world as it is today – or as it has been in the past. The challenge is as much an opportunity for public service broadcasting as it is a threat to it.

We highlighted in Digital PSB and subsequent planning a number of areas for Ofcom’s PSB-related work in 2006/7:

First, the maintenance of the current high levels of high quality UK originations and the pressure on some core genres

• The future of news: news is the most valued programme genre amongst viewers, but access to and viewing of television news may shift in future, especially after digital switchover. We have been assessing the future prospects for television news in the changing environment. This project aims to assess what news services may be provided in future, how the market for news is likely to develop, and the implications for plurality and quality of news provision
• Planned work on children’s television and Nations and Regions programming: as we set out recently in Ofcom’s draft Annual Plan for 2007/8, we will also carry out further work on the future of children’s television programming and on non-news programming for the Nations and Regions of the UK.

Second, securing plurality and diversity in the wider digital media market

• The future of Channel 4: Channel 4 has played an important role in PSB over the past quarter century, but it has raised a range of questions about the future sustainability of its model for funding public service content. Ofcom has commissioned L.E.K. Consulting to conduct a full independent financial review of Channel 4 – considering Channel 4’s financial and operating performance both now and in the future; its continuing fulfilment of its public service remit; and whether intervention may be needed to support its PSB delivery in future
• New media forms of public service provision: in the digital age, a new organisation could provide additional innovation and plurality – we notionally described this new organisation as the Public Service Publisher, the PSP. Since publishing Digital PSB, we have carried out further work to develop a more detailed vision for the PSP – in policy, creative and in practical terms. This document publishes our work in this area.

We want to secure a public service system for the future which continues to deliver the best elements of the previous model: one which addresses viewers’ interests through the provision of substantial amounts of high quality, UK-originated content; and which is characterised by a number of suppliers competing to provide that content.

No single approach will ensure that the quality of PSB delivery is maintained and strengthened in each major area such as news, children’s programming, and programming targeted at the Nations and Regions. In each case consideration needs to be given to the future of both existing and new PSB providers, as well as to the contribution of the market. As a result we are publishing separate reports on each of these issues over the coming year, to inform to our next statutory PSB review which will start in 2008.

This document addresses how the delivery of public service purposes and characteristics might need to evolve given the continuing rapid development of digital media. It also describes the role that the PSP might play in the new system. We are not suggesting that the introduction of the PSP would address all of the challenges for the future of PSB – other responses to the issues highlighted above may well be needed, which we are considering in our other PSB work.

The issues around the PSP are not only about delivery and distribution – they are also creative in nature. To address this, we asked Anthony Lilley of Magic Lantern and Andrew Chitty of Illumina Digital to lead a forum of digital media practitioners to explore potential PSP content and services. The main conclusions from the forum’s work are included in this paper, and further detail can be viewed at www.openmedianetwork.org.uk.

There is a long history of renewal and reinvention in delivering public service as technologies change – major museums were founded to inform and educate citizens in the 19th century; public service radio and television reached the whole UK in the 20th century; and now a new approach is needed for the digital media world of the 21st century. We believe that a new PSP could make a significant and enduring contribution to this new approach. But the PSP is only part of the overall solution, and its role needs to be considered alongside approaches to the major areas of public service content, and existing PSB providers. We look forward to responses to this document, and to the continued debate on the evolution of PSB.

Executive Summary

1.1 This document aims to set out a new approach to the delivery of public service content in the digital media environment, one which addresses both the changes in the historical system of public service broadcasting (PSB) in television, and also the new ways in which citizens and consumers are accessing content.

1.2 We are living in a world in which viewer behaviour is changing rapidly – in recent years, the consumption of most television content has moved from analogue onto digital media platforms. Moreover, our understanding of what is meant by television is changing at the content, network and device levels. These changes have profound implications for the traditional broadcasting market, and for the future of the PSB system. This document explores these market changes, and suggests a particular response – the Public Service Publisher (PSP) – as part of a range of new ways to secure a strong and plural public service system for the future.

1.3 Ofcom originally developed the idea of the PSP in the review of public service television broadcasting (the PSB Review), which was completed in 2005. In the period since the PSB Review, the communications industry has experienced radical and exciting change. In 2006, we announced our intention to carry out further work to examine the case for the PSP in more detail, and to develop thinking on the distinctive content that the PSP could provide. We also noted that the potential role of the PSP needs to be considered in the round with that of other providers of PSB, and particular genres of PSB content – these wider issues are being addressed in Ofcom’s ongoing and future work on Channel 4, news provision, children’s programming, and non-news programming for the Nations and Regions.

1.4 We recognise that Ofcom, as a regulator, is not best placed to reach a view on the precise nature of the PSP’s content. In that context, and in order to inform this work, we engaged a Creative Forum of digital media industry experts to develop a content and operational vision for the PSP. This group was led by Anthony Lilley (Chief Executive of Magic Lantern Productions) and Andrew Chitty (Managing Director of Illumina Digital) – their main outputs are included as two sections of this paper, and are also available online at www.openmedianetwork.org.uk.

Background

1.5 This work has been carried out in the context of Ofcom’s overall statutory remit to further the interests of citizens, secure availability of a wide range of television and radio services, and maintain a sufficient plurality of providers of different television and radio services.

1.6 We have consistently emphasised the importance of securing the delivery of high quality, UK-originated content through a range of providers. Where developments in the market affect the future provision of such content, we need to monitor these developments, and report on how we can meet our duties in the changing world. Although Ofcom does not have the powers to make new interventions to secure public service content in digital media, we should make appropriate recommendations to Government on the future of PSB and any steps needed to secure the continued vitality of the PSB system.

1.7 In addition, the Communications Act also requires Ofcom to carry out a review of public service television broadcasting (the PSB Review) at least every five years, and to make recommendations on maintaining and strengthening the quality of PSB delivery for the future . This document builds on Ofcom’s first PSB Review, and considers how public service delivery can be maintained and strengthened in the digital media age.

The need for a new approach

1.8 Our mandate requires us to consider the future of PSB delivery in UK television. However, we believe that the changing market requires our thinking to include areas beyond broadcasting – linear television remains important, and will remain so for some time to come, but it is no longer the only means of getting high-quality audio-visual content to viewers. In consequence, the traditional approach – though it continues to be at the heart of the system for PSB – may alone not be sufficient to secure the full range and extent of PSB output in the future.

1.9 Television is now part of a rich and exciting digital media landscape. Time and money spent on other communications technologies has grown rapidly and significantly, and consumers are increasingly accessing content on the internet and other digital media platforms. In less than a year since it came to mainstream attention, YouTube (http://www.youtube.com/) developed into a $1.6bn company. And more than 2.5 million people now pay $10 per month to play Second Life (http://secondlife.com/), a media experience so innovative that it is prompting a reinterpretation of the idea of video games. These developments are particularly prevalent amongst younger audiences, who are taking advantage of technological advances to change their approaches to content consumption to suit their particular needs. For younger audiences, the mobile phone is now the most important communications medium – not television, and the internet represents an increasing proportion of their communications activity.

1.10 Forms of content are changing too: newer platforms allow two-way, participative communications – the ability of users to create, annotate, comment and communicate around content goes some way towards explaining the adoption of the internet as a cultural phenomenon. We can see the importance of these characteristics in many existing forms of digital content – whether social networking sites such as myspace and Bebo, user / community generated sites such as YouTube, and information sites such as wikipedia. Digital media is already offering examples of a rich, interactive media experience. In section 2 of this document, Anthony Lilley outlines the way how different this is from traditional broadcasting – and the implications for the market of that difference. Although this will put pressure on traditional one-way public service broadcasting, it also represents an opportunity for public service purposes to be fulfilled in an increasingly engaging way.

1.11 At the same time, the rise of digital multichannel television has brought with it increased competition and viewer fragmentation, which in turn has seriously challenged the viewing shares of the existing public service broadcasters (PSBs). These market developments are threatening the established public service system – it may not be realistic to expect most of the commercially-funded PSBs to accept significant public service obligations for a great deal longer. Two years ago, this was a radical proposition – but it is accepted more widely today. These obligations secure not only a number of key genres, but also a wide variety of benefits for the industry and consumers – notably the existing high levels of UK-originated content.

1.12 In this changing landscape, we believe that the means of public service delivery need to change as linear television gradually diminishes in importance. Ofcom defined the purposes and characteristics of public service broadcasting in the PSB Review. These endure into the digital media age, but are no longer solely the domain of traditional television – they can (and should) now be delivered through a wider range of digital media.

1.13 Indeed, we are already seeing public service content starting to emerge on newer platforms – provided by existing PSBs and by other organisations. For instance, Blast Theory (http://www.blasttheory.co.uk) explores some social and political aspects of technology using interactive media; games such as Hopelab’s http://www.re-mission.net are developed to help young people with cancer gain more awareness of the condition; and, amongst the UK PSBs, Channel 4’s FourDocs (http://www.channel4.com/fourdocs/) allows users to generate, upload and view four minute documentaries. As the wider digital media market develops and become more accessible and better funded, we would expect provision of public service content on those platforms to increase.

1.14 Nonetheless, the rationale for intervention in support of public service content is likely to remain in the digital media world. Changes in the market will eliminate many of the structural requirements for intervention: the market will provide a greater variety and volume of content across all digital media and commercial providers are likely to deliver content that meets public purposes – this is already happening in television, and may become increasingly important in other media. However, the factors that continue to drive intervention in linear television – namely that public service content continues to deliver economic and social benefits that would not be realised without intervention – are also relevant for wider digital media.

1.15 These factors are at the heart of the citizenship-based rationale for intervention to support public service content. For instance, individuals may receive more benefit from content – for instance through news and information – than they realise. Similarly, an individual’s viewing of content can have additional benefits for society as a whole, for instance through his or her engagement in the democratic process as a more educated citizen. The public service purposes and characteristics defined by Ofcom are intended to address these citizenship issues – and so address the problem that the market is unlikely to provide the full set of content and services that will maximise the benefit to society.

1.16 Overall, therefore, although public service content will be provided by the market, it may well not be enough either in terms of quantity or diversity – a market shortfall is likely to arise. This may have adverse implications for the level of UK-originated production, and for plurality in the public service system – the BBC is likely to play a material role in the digital media world of the future, but for a public service culture to flourish, effective competition for quality is needed.

Options for future public service delivery

1.17 Overall, there will be a range of opportunities and challenges for the public service system – on traditional television, and on newer platforms. These may require a range of responses, some of which could be focused on traditional TV, and others could help ensure that public purposes and characteristics are properly addressed on wider digital media.

1.18 If further intervention were required on public service grounds, a number of potential avenues are available. Further intervention could:

• Be limited to linear television only – with funding focused on specific broadcasters, forms of content (e.g. support for regional news, local TV or indigenous language services), or via targeted grants on a commission-by-commission basis
• Have an important digital media element – whether support for existing providers (either existing broadcasters or other digital media operators), or funding for a new organisation designed to deliver public service goals in new ways.

1.19 Both of these options have merit, and are not mutually exclusive. A mixed approach is likely to be both necessary and desirable – for instance, the public service shortfalls in television may require a different response from those in wider digital media. We therefore do not consider it appropriate to suggest ruling out any of the options at this stage.

1.20 However, as part – but certainly not the entirety – of a new model for public service delivery, we continue to believe that there is value in considering the creation of a new organisation: a new provider of public service content, the PSP, with its centre of gravity in digital media and with a remit specifically designed for new forms of content provision – but ones that clearly deliver the purposes and characteristics of PSB. We believe that the changing digital media landscape creates a new opportunity for the delivery of public service content, and that the PSP could play a valuable role in addressing this opportunity. Existing organisations are also likely to deliver content in new ways – and indeed this is already happening. However, a new organisation would provide a new source of innovation, and would be able to place new forms of public service delivery at the heart of its mission.

1.21 We have therefore sought in this document to develop the role that the PSP could play. We stress that, in developing the PSP concept further, in no way are we suggesting that the introduction of the PSP would address all of the challenges for the future of PSB – specific responses may be needed in relation to each of the issues highlighted in the Foreword of this document, and these are the subject of other work within Ofcom.

1.22 Moreover, we are open-minded about whether the PSP will be a new organisation, or attached to an existing institution. Either way, the PSP would not be a straight replacement for the PSB content that is under threat on traditional television – rather, it would represent a new and complementary approach to public service delivery. As a result, the role of the PSP needs to be considered in the round with that of existing PSB providers, and key areas of public service content – the PSP is only part of the overall solution, but we believe it could be an important part.

The PSP’s content

1.23 The PSP has always been conceived of as a new media response to the challenges of digital media. It would meet public purposes using the tools, technology, insights and culture of digital media, both in production and distribution. As consumer behaviour changes rapidly and online content moves more into the mainstream, it becomes more important to consider afresh the style, form and substance of content which will inform, educate and entertain in the multimedia digital age.

1.24 The PSP’s content would share a number of important characteristics that digital media enables. At its heart, the content would be participative in nature. This enables a new approach to public service delivery – in which citizens are users rather than viewers of public service content, are able to personalise the content and experience, and where the distinction between producer and consumer of content is much less explicit. The PSP would drive community activity and mediation, and it would offer location-sensitivity and a diversity of viewpoints. Its content would retain the purposes and characteristics of the most successful public service television and would aim to have similar levels of influence and impact, but it would be delivered in new ways. Section 4 of this document – written by Andrew Chitty – sets out a number of illustrative examples of possible PSP content that display these characteristics.

1.25 The PSP would use all communications platforms and technologies to achieve reach and impact – it could use TV distribution for its content, but it would not take traditional broadcast as its starting point. Some of its output would – like television programmes – be based on linear video content; but most of its content would be supported with more interactive and participative aspects.

1.26 For instance, factual content could be adapted to the viewer’s personal preferences – so different individuals viewing (say) local, regional and national content could be tailored to individual preference based on their known or stated interests. The PSP could therefore allow each individual to access the same title, but see different content. Content could also be made location-specific – current affairs or news content delivered over mobile devices could allow the context of the piece to differ depending on the precise location in which the content is being watched.

1.27 Some of the PSP’s services would not resemble linear programming at all. For example, the PSP could harness the lessons of gaming to develop models for the successful engagement of audiences – for instance considering issues of health, social welfare, political engagement and economic policy. But the PSP needs to have focus – to be viable, it cannot simply support worthy causes based on a vague notion of public interest. If the PSP is established as a response to an enduring PSB argument, it should address the particular shortfalls that can be expected in the PSB arena of the fully digital age.

The PSP’s operating model

1.28 Decisions on the PSP’s operating model are in part linked to the level of funding appropriate for the organisation. This will need to be decided in the context of possible wider public funding in the PSB ecology and the scale of comparable institutions in the digital media market. Given the PSP’s potential remit, we suggest funding of £50m to £100m annually as a sensible starting-point. However, the PSP’s role within the public service system is likely to grow over time, and its initial funding may need to be expanded. However, we stress that this is an approximate figure based on the current comparators and likely remit. As the market evolves and more detail is known, the figure will need to be considered further.

1.29 Equally, the specifics of the PSP’s operating model will depend on its precise remit and approach to content provision. However, this document suggests how the PSP might work in practice. We recognise that other operating models are possible – in the responses to this document, we would welcome thoughts on the possible alternatives. For now, we suggest that PSP’s operating model is likely to have four main elements:

• First, the PSP could be a commissioner – rather than a producer – of participative content. It could work with a diverse range of suppliers, from traditional linear content producers to others rooted in alternative markets such as gaming and social networks
• Second, a more radical rights model could be designed specifically for an organisation delivering public purposes in new ways. Overall, we believe that the PSP should be “share-aware” – meaning that the rights exploitation model should embrace the reality of a participatory media environment, and not struggle against it. In particular, this means that alternative open licensing models – which allow content to be re-used and modified by others – are likely to be more appropriate for the PSP than traditional rights models
• Third, the PSP would operate a non-commercial business model, although the open rights model could allow other parties to develop commercial propositions that build on PSP content and services. Relevant analogies here include open source software – which can be freely used and modified by users, but which has also prompted commercial operators to develop value-added services to support the free software. In the case of the PSP, if commercial propositions were developed in response to PSP-funded content, a share of commercial income should be returned to the PSP and to the content producer
• Fourth, the PSP could aim to secure reach and impact by partnering with other organisations for distribution – possible partners include traditional broadcasters, local TV and community media, alternative platform operators, and service providers. We believe that investment in technology platforms would be expensive and could draw the PSP away from its core remit to ensure the delivery of new forms of public service content – we therefore consider it more appropriate for the PSP to work with other organisations with established distribution arrangements. Similarly, we would not necessarily expect the PSP to invest significantly in developing a consumer brand proposition. Rather, it could establish itself as a “facilitation brand”, subordinate to other brands in consumers’ eyes, but having an important impact in the decision process – providing a potential mark of quality, much like the “Intel Inside” brand for PCs.

1.30 More broadly, this document also considers the PSP’s wider market role. In particular, the PSP could be based outside London in order to facilitate a wider spread of investment across the UK, and to ensure that the diversity benefits of out of London production are delivered. The PSP could contribute to media literacy by working to increase take-up of new media platforms amongst those who do not or cannot access new services at present; and it could play an important role as a public service navigator, helping to guide users to public service content in addition to that commissioned by the PSP.

Next steps

1.31 We are open-minded about the best solution for the future of public service content – we will not report again on the how to maintain and strengthen the quality of PSB until the next PSB Review, which must be completed no later than 2009/10. The primary purpose of this paper is to take the debate forward within the UK’s creative industries and policy environment. We continue to believe that there is a real opportunity for a new PSP to make a significant contribution to the public service system, and to create a lasting legacy for the future.

1.32 We welcome the Culture, Media and Sport Select Committee’s interest in the PSP concept in its inquiry into public service media content . Our evidence to that inquiry summarises many of the points made in this document.

1.33 As a result, although this document is not a formal consultation, we are actively seeking responses on:

• The appropriate nature of intervention in the digital media age, and the balance between TV and non-TV forms of public service content distribution
• The potential role of the PSP and its creative remit
• The operating model – in particular, the approach to rights management
• The scale of funding required.

1.34 As noted in Ofcom’s Draft Annual Plan, published on 12 December 2006, we will during 2007/8 take forward our thinking on public service content and the PSP in the context of the wider work programme running up to the next PSB Review. We will develop the PSP concept further through:

• A series of events focusing on the key themes regarding how the PSP would work in practice – the different aspects of its content, and its operating model. This would involve discussions with a wide range of players from across the digital media industries about the potential and practicality of the PSP
• Enhanced versions of example PSP content and services, building on the material developed by the Creative Forum – we are keen to work with organisations active in the digital media space to develop possible content. These examples could be launched at, and thereby help inform, the new series of events
• Exploration with government and other public bodies of the prospects for funding for PSP-type projects, and discussions with content providers regarding the types of prototype PSP content and services that funding could be used to support
• Full consideration of the responses to this document – we would welcome thoughts and reactions to the issues raised in this document by 23 March 2007. We will review these responses with a view to publishing a summary later in 2007. At the same time, we will carry out further work within Ofcom on some of the key structural and operational aspects of the PSP.

Structure of this document

1.35 The rest of this document elaborates on the above discussion in more detail. Although this document is published by Ofcom, two of the core sections are written by external authors :

• Section 2, written by Anthony Lilley of Magic Lantern, introduces the changing digital media landscape
• Section 3 develops Ofcom’s views on a possible new approach to public service content, and sets out the options for future public service delivery. The next two sections consider one of these options – the PSP – in more detail
• Section 4, written by Andrew Chitty of Illumina Digital, sets out the areas of content that the PSP could focus on
• Section 5 provides Ofcom’s thoughts on some of the important elements of the PSP’s operating model. These thoughts are informed by the work of the external Creative Forum
• Section 6 concludes with next steps.

1.36 In addition to the above, members of the external Creative Forum have contributed supporting vision papers, available at www.openmedianetwork.org.uk, which are published alongside this document. The outputs of the Creative Forum comprise initial views of how the PSP could work in practice. In our view, they present exciting early propositions for the potential of the PSP. However, they are not the only propositions – we are therefore keen to receive as many additional visions as possible through the responses to this document.

• A new approach to public service content in the digital media age [pdf]
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