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Regulatory framework.

The Charter and Agreement require the BBC and the Trust to publish documents explaining the BBC's purposes, setting out its policies and priorities, and describing the remits of its services.

Trust's service review of bbc.co.uk - Executive Summary

This review considered three over-arching questions:

  1. How does bbc.co.uk currently perform against the commitments made in its Service Licence?
  2. Does the Service Licence provide an effective basis for the Trust to hold bbc.co.uk to account?
  3. Should the Service Licence for bbc.co.uk be developed or changed in order to reflect changes to bbc.co.uk, its users' needs and the online market?

Having addressed these questions our headline conclusions are as follows:

bbc.co.uk is an excellent service that is highly valued by users and meets the majority of its Service Licence commitments.

Improvements to management's control of the service are needed and we will restructure the Service Licence to offer better accountability.

We endorse the development of the service but will not approve new investments until we have considered their likely public value and approved proposals for improved management control.

We consider each question in detail in sections 3, 4 and 5 of this report respectively. Our key findings and conclusions are summarised in this section, together with a list of actions arising from the review for the Trust and BBC management.

1. How does bbc.co.uk currently perform against the commitments made in its Service Licence?


bbc.co.uk is an excellent service that is highly valued by users and meets the majority of its Service Licence commitments.

bbc.co.uk performs very well against the four drivers of public value: reach, quality, impact and value for money. In spite of growing competition in the last three years, bbc.co.uk's reach has continued to grow. It is highly valued by a broad range of users and performs very well on quality measures. The impact of the service derives from its contribution to the BBC's public purposes, which is in most cases very strong. As the BBC's third most widely used service, bbc.co.uk appears to provide good value for money.

bbc.co.uk makes a strong contribution to many of the BBC's public purposes through its provision of high quality news and other content. bbc.co.uk is especially strong in promoting the Citizenship and civil society, Nations and regions, Education and learning, and Global purposes. Despite the growth in competition, bbc.co.uk remains the most visited site amongst UK users for news and sport and amongst the most widely used for children's, formal and informal learning and local information. Online is becoming a very important platform for delivering some central parts of the BBC's remit, such as formal learning. We have been struck by how highly bbc.co.uk is valued by users who rate the quality, range and depth of bbc.co.uk's content in these areas.

We will make its strong contribution to the public purposes clearer when we amend the Service Licence following this review.

While bbc.co.uk meets most of its Service Licence commitments, we have identified four areas where it can be made still more effective.

More needs to be done to ensure that all parts of bbc.co.uk are distinctive. Audiences tell us that they see the service as a whole as distinctive thanks to its range and depth of content, lack of commercial agenda, UK focus and adherence to BBC journalistic values. However, other operators clearly have some concerns about its presence in particular markets. We note that such concerns were highlighted by the Graf review and that they persist. In reviewing the service we found that management had no agreed definition of distinctiveness and therefore no consistent means of addressing these concerns. As distinctiveness is a key requirement for all parts of the service, we are asking BBC management to adopt our proposals for a rigorous and consistent approach to assessing bbc.co.uk's distinctiveness.

Improvements are needed in internal search and navigation. Users of the service have told us clearly that, while they value it highly, there are weaknesses in these areas. We believe that improved horizontal navigation across all areas of bbc.co.uk is important to enhance the reach and impact of the BBC's online presence. We also found that the BBC's internal search engine is not effective and its usage is declining. We welcome the fact that BBC management is currently working on improving its features and effectiveness. We question, however, whether the BBC should have a role in providing mainstream web search and are asking management to take a decision on the future of this function following this review.

Linking to external sites needs to be more effective. We are disappointed to find that bbc.co.uk's provision of links to external sites is not leading to more click-throughs, despite this being identified as a priority in the Graf review. We are asking BBC management to find ways of increasing the effectiveness of its provision of links and ensuring that bbc.co.uk helps its users navigate to external sites from all parts of the site.

bbc.co.uk has helped make the BBC more accountable, but more can be done to meet the public's growing expectation of open dialogue. Meeting users' growing expectations of open dialogue presents a challenge to bbc.co.uk. BBC management has plans to invest in audience participation and interactivity which we hope will address this.

2. Does the Service Licence provide an effective basis for the Trust to hold bbc.co.uk to account?


Improvements to management's control of the service are needed and we will restructure the Service Licence to achieve better accountability.

Management control of bbc.co.uk is not sufficiently strong at present. Our review has found that financial oversight has not been sufficiently effective, such that the true level of spending on the service has only become known as a result of this review and, at £110million, is much higher than the upper level of spend permitted in its Service Licence of £81.6million. We believe that this is partly due to the devolved management structure for online activities in the BBC. This lack of financial accountability is not acceptable, although we acknowledge that this is primarily a result of misallocation between cost centres.

We have also identified weaknesses in both the service's strategic and editorial oversight which need to be addressed.

BBC management needs to demonstrate more clearly how bbc.co.uk delivers public value while considering potential negative market impact. Licence fee payers need assurance that the BBC is spending their money effectively on distinctive, high quality content that promotes the public purposes and that it does not have undue negative market impact. We are therefore asking BBC management to develop a system of assessing online output that takes into account:

We believe that more robust management control of bbc.co.uk, combined with effective Trust oversight will offer the appropriate degree of accountability. BBC management acknowledges that there need to be improvements in its control of bbc.co.uk, alongside clear procedures for ensuring oversight by the Trust. We think this is both consistent with the separation of the Trust and Executive Board set out in the Charter and the only practicable way of allowing the service to adapt in a fast-moving market while also taking proper account of competitive impact issues.

We are asking the Executive to seek Trust approval for a new management system for bbc.co.uk within six months of this review's completion. We will review the effectiveness of the new system one year after it has been put in place.

We will restructure the Service Licence for bbc.co.uk. The review has shown that stakeholders do not believe that the current Service Licence offers adequate accountability for the BBC's online activities. While we were not persuaded that the service should be governed through several separate Service Licences, we do plan to create separate annexes to the bbc.co.uk Service Licence, covering the main editorial areas: news, sport, nations and local, formal learning, audio and music and vision. These will include a budget for each area.

3. Should the Service Licence for bbc.co.uk be developed or changed in order to reflect changes to bbc.co.uk, its users' needs and the online market?


We endorse the development of the service but will not approve new investments until we have considered their likely public value and approved proposals for improved management control. Internet usage has changed a great deal in the past few years. We have reviewed the development of the internet market since the Graf review and concluded that user behaviour has changed in a number of ways – internet use is now "like breathing " to many and new types of activity, such as social networking, have become very popular. Overall, the internet is becoming more of a mainstream entertainment medium.

We agree with management that bbc.co.uk needs to adapt to reflect these changes. We believe that without investment in content and such areas as improved search and navigation, personalisation and audience participation, the service will lose its appeal and thereby be hampered in its ability to promote the public purposes.

However, we believe a cautious approach to approving new investment plans is in the best interests of licence fee payers.In its high-level, six year plan which the Trust approved last October, BBC management proposed a substantial real terms increase in bbc.co.uk's budget by 2012/13. It has since made clear its intention to front-load this investment with a proposed increase of £39m in 2008/9. This comes on top of what looks to have been a marked increase in spending in recent years, although we note that it is proposed in the context of a very rapid growth in the size of the online market. However, we are also aware that this review has highlighted weaknesses in management's financial, strategic and editorial oversight of the service and believe we therefore need to proceed with caution in approving new investment.

For this reason, we will not approve the proposed new investment in bbc.co.uk until we are satisfied with management's proposals for improved management and control of the service and have subjected them to greater scrutiny, taking into account questions of public value, distinctiveness and competitive impact.

We believe this cautious approach to be in the best interests of licence fee payers, by ensuring that new investment will create public value without having undue negative market impact.

Actions resulting from this review

This review sets out a number of actions for BBC management and for the Trust. These are set out below.

  1. Plans for improving linking and other ways of encouraging users navigate to external websites should be developed and brought to the Trust for consideration. Click-throughs should be made part of regular performance reporting to the Trust. Action: BBC management.
  2. Proposals for BBC role (if any) in providing external web search to be brought to the Trust for consideration. Action: BBC management.
  3. BBC management should consider the points made in our public consultation by other operators in the BBC's markets and respond to them where necessary. Action: BBC management.
  4. Guidance and principles for allocating costs between linear and online activities, as well as systems and processes for collecting and reporting this allocation should be developed. These plans will be subject to an independent review by the BBC's auditors and the Trust will publish its decision on this. Action: BBC management. and BBC Trust
  5. Proposals for a new system of management control of bbc.co.uk should be developed, predicated on more effective financial, strategic and editorial oversight by management; to include proposals for a system for assessing online content and services both prospectively and retrospectively in terms of their contribution to public purposes, distinctiveness, and potential market impact, with a clear structure of responsibility within management and for reporting issues of significance to the Trust. Proposals to be brought to the BBC Trust within six months of the publication of this report. Action: BBC management.
  6. There should be a review of the effectiveness of the new management structure within one year of its implementation. Action: BBC Trust.
  7. The baseline budget for bbc.co.uk will be revised to £114.4 million for 2008/09 with immediate effect. Action: BBC Trust.
  8. The Service Licence for bbc.co.uk to be reissued with the following types of changes: revised commitments, aims and objectives, in line with the findings of this review; revised baseline budget; new annexes setting out the scope of each of six key editorial areas (news, sport, formal learning, nations and local, audio and music, vision). Action: BBC Trust.
  9. Detailed plans for new investment in bbc.co.uk to be brought to the Trust for consideration. Plans for local video and formal learning for 6-10 year olds to be subjected to public value tests by the Trust. Action: BBC management and BBC Trust.

We have asked BBC management to respond to these actions, setting out how they will be addressed. That response will be published.