Rory Sutherland Rory Sutherland

Why the BBC licence fee makes sense

A consensus seems to be forming that the BBC licence fee is for the chop. In a digital age, the reasoning goes, we should not be forced to subscribe to huge bundles of content, with no choice over what we pay for and what we don’t.

This argument, intriguingly, is both true and false at the same time.

It is worth remarking that Netflix and Spotify succeeded by adopting a very similar model to, er, the BBC

What’s true is that technology has removed two constraints which made the licence fee necessary in the first place. At the BBC’s outset, the airwaves were limited, creating a monopoly. Moreover it was impossible to charge for specific content: anyone with a wireless set could freely enjoy anything on air. Other than advertising, a licence was the only option. Neither condition applies today.

Yet when people assert that competition from Netflix, Amazon Prime or Spotify make a licence fee indefensible, it is worth remarking that these upstarts succeeded by adopting a very similar model to, er, the BBC. By which I mean that you pay a set fee, and in return get access to a huge amount of bundled, ad-free content, most of which you don’t want. Every month I pay Netflix and Amazon to make programmes I will never watch, while paying Spotify money to fund bands I hate. Netflix is, in its way, a kind of global BBC.

Why might this be? At first glance, it seems absurd to suggest that consumers are better off when you make them pay for things they don’t want. The late Senator John McCain thought so, and devoted a great deal of energy to campaigning against the US cable companies’ practice of bundling channels, rather than letting customers choose à la carte.

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