Rory Sutherland Rory Sutherland

Let’s pay for the BBC content we use

When people are free to choose what they buy, they buy more and pay more

issue 01 August 2015

What follows is a proposal for reducing the BBC licence fee and improving the corporation’s output while saving the British newspaper industry.

All that’s involved is a basic understanding of pricing psychology combined with a digital currency for micropayments. Under my proposals, half the licence fee would fund the BBC’s Reithian purpose; the other £60 could be paid direct to the BBC as now or, if you chose, paid to you as a digital currency (6,000 Beebcoins). People could buy additional Beebcoins, which could be spent on BBC or competitor content — including content from newspapers. Notionally the BBC would lose out; in practice they would gain revenue, as they could now sell premium services. When people can choose what they buy, they buy more and pay more.

A simple fact: people hate paying for things they don’t want. Nothing remarkable there, except people especially hate paying for things they don’t want bundled with things they do want. One behavioural experiment asked people what they would pay for three attractive pens; the average was about $30. But offer the same three nice pens with one crappy pen added and the amount people pay falls. I know, I know — it’s illogical. Why not throw the crappy pen away? But that’s not how we think. People who’d pay £10 a month just for Radio 4 resent the licence fee because they don’t like Graham Norton.

I’d pay £1 to read any article by John Kay, but can’t bring myself to subscribe to the FT because I’d have to pay for pages of guff on the ‘Central Bank crisis in Ecuador’; I won’t subscribe to the New York Times because, as a Brit, I refuse to pay for articles about the ‘knife-edge gubernatorial race in Iowa’.

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