29 November 2011

Market Distortion in the News Industry


Newspapers have been unable to monetise the internet as an income stream. This is in part because the BBC website offers so much content for free (i.e licence fee-payer funded) that it heavily distorts the market and mitigates against charging for content. The BBC itself has been forced to recognise this and plans to scale back its website by 20% to allow ‘room’ for competition. Local radio stations also suffer hugely from crowding-out by BBC local radio. Similarly, local paper circulation and revenues have been damaged by the council ‘freesheets’ that Eric Pickles was meant to dispose of.

Government-funded news organizations are problematic not only because they have a strong tendency to kill off the competition, but because they often function as a propaganda arm of the government itself.  Americans, of course, have a tendency to complain about how the fourth estate is in the pocket of Big Government, but it is the British for whom this is perhaps literally true.  As such, the British run the (very large) risk of having the BBC be nothing more than a propaganda machine, assuming it isn’t already.

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