Caroline Thomson, Chief Operating Officer

Date: 19.11.2008     Last updated: 18.03.2014 at 18.14

Turning the BBC inside out: Supporting the UK's creative industries in uncertain times
Speech given at Creative Clusters 2008, City Halls, Glasgow
Wednesday 19 November 2008

Check against delivery


Standing here on the conductor's podium makes me feel quite nervous. I'm half expecting someone to come on and present me with a baton – a bit like the BBC Two show, Maestro.

I'm not sure what Ilan Volkov would have to say about that. This is of course his podium and this is the home of the brilliant BBC Scottish Symphony Orchestra. They have been rehearsing today for their performance of Stravinsky's ballet Agon, which they are recording for BBC Radio 3.

If you haven't got tickets for their current Russian Winter season, a brief plug for something exciting and new that's happening next week. Thanks to iPlayer Thursday's concert will be available to online audiences in high quality sound and vision for seven days after the live broadcast.

It's part of our digital revolution – allowing amongst other things what we are calling the "visualisation" of Radio 3. It's a great example of how the latest technology can now bring this wonderful Scottish orchestra to a whole new audience – anytime, anyplace, anywhere – the freedom of digital.

The BBC's orchestras are actually a good illustration of the whole range of very important developments taking place in the wider BBC – digital but also others – which are my main topic today.

Orchestras are by their very nature outward-facing. They connect with a wider community. They provide a focus for the creative energy of the region they serve and the nation as a whole. And not just through delighting audiences with wonderful concerts. The BBC Orchestras run all sorts of education and community outreach programmes that get people of all ages and abilities involved in making music. In other words, they see themselves as having a role beyond the performance, or beyond the broadcast. And it's this idea which I want to explore this afternoon.

Turning the BBC "inside out"

The BBC's new broadcasting centre for the whole of the North of England, now under construction at mediacity:uk in Salford Quays, is another good illustration of what I mean. When we decided to move 1,600 jobs to the North West, the primary objective was to improve our output and thus serve audiences across the UK better. For many years, approval of the BBC has been lower in the North of England than in the South. There is evidence that by moving the production base north we would change the output in subtle ways – accents, storylines, news values – and that this would help audiences reconnect with us.

However, having announced and now being at an advanced stage of planning the move, it's clear that it can and will achieve much more.

I think of it as "turning the BBC inside out". Instead of looking inwards for so much of the time, as I fear we have done all too often in the past, we are now consciously looking outwards, Outwards at partners in the broadcasting industry whom we once regarded as competitors. Outwards at opportunities to benefit the whole of the UK media industry by driving technological change, and outwards to deliver content in new and innovative ways.

The BBC will always be, first and foremost, about great programmes which delight audiences – that is our raison d'être and we forget it at our peril. But there is a dimension beyond that – a dimension of increasing importance. There are three parts to this "turning inside out":

Our role as a catalyst – using our economic power and our brand power as the spark to generate "creative clusters" – independent production companies, freelancers, design houses, research and design, games companies – gathering together, stimulating each other. The total being more than the sum of the parts.

Our role in building digital Britain as a vibrant source of creativity, jobs and economic success. From digital switchover through to broadband.

Our role as "the venture capital of the creative industries" as Tessa Jowell once put it, supporting the rest of the creative industries. The transformation of the BBC from a competitor to a collaborator.

This is a bold vision – a challenge to achieve – but make no mistake: this is not just hot air. We are serious and we're already taking significant steps to get there.

The first is we are moving the BBC away from the old hub-and-spoke model – with London as the hub and the spokes linking to national and regional centres. Instead the vision is that the BBC will be fully networked – built around centres of creative production expertise linking every part of the country.

Creative clusters

Creative clusters are at the heart of the BBC's thinking. We are building sustainable production centres each with specialist production skills and each intended to be a nucleus that will stimulate the creative economy across a wide region.

By 2016, more than half our staff and 50% of network programme spend will be out of London. In the Nations (Scotland, Wales and Northern Ireland) the figure will go up from 6% in 2007 to 17%, and that is a floor, not a ceiling. The English regions will account for 33%. This represents a big shift of economic power.

The targets are challenging. Making the networked BBC model work and delivering creative clusters is crucial if we are going to meet those targets. The networked BBC model balances production from across the UK, focusing investment and effort against a network supply map. In each location we are maximising sustainability by aligning the supply of in-house and independent production.

In developing creative clusters, we will build on our partnerships with key organisations such as Regional Screen Agencies. Their involvement is vital to the growth of local industries. So is the involvement of the independent sector and we have announced a range of initiatives to work with them to sustain centres of excellence.

Making a big network television show can light the fuse for an explosive growth in the creative economy of a whole region. Since BBC Wales started making Doctor Who in Cardiff, for example, the momentum has kept on building through spin-offs like Torchwood, Sarah Jane Adventures and now Merlin, made by the independent Shine. In four or five years, it has moved from a tiny warehouse to big premises and now employs 400 people at peak.

With all the props and special effects that are needed to produce a show like Doctor Who and associated online sites and games, all kinds of facilities spring up around it. That brings work to the local economy and provides opportunities for local talent to develop thriving businesses and a long-term stake in the region. New shows can then tap into all those facilities. So talent clusters form quite naturally around this kind of infrastructure.

According to research commissioned by the UK Film Council and the National and Regional Screen and Development Agencies (2005), for every £100 of direct spend on TV production in a region, there is an additional £80-£110 of economic value generated through both indirect and induced effects.

Let me explain what I mean by "indirect and induced effects". For example, a proportion of TV production's budget is spent on catering. The caterers will often source food from within the region, spending money with local butchers and grocers. These businesses will indirectly benefit from the TV production through a second round of spending. There will also be an induced impact through the income of those employed on the production, increasing household expenditure on consumer goods and services within the region.

This effect is even bigger when you consider a regional production's effect across the whole of the UK. For every £100 spent in a region, there is an additional £180-£240 of value created when considering the impact of the production not just in its home region, but across the whole of the UK.

Talent clusters also stimulate the higher education base. Universities and colleges join in partnerships, students win placements and graduates get jobs. For instance, several students from the Royal Welsh College of Music & Drama in Cardiff have had placements with the Doctor Who and Torchwood team, and a number of graduates, particularly in scenic design, have won jobs.

Building digital Britain

Today, driving technological change and delivering content in innovative ways is explicitly set out as one of the BBC's public purposes. We are charged with delivering to the public the benefit of emerging communications technologies and services.

You could call it "building digital Britain". It is and should be, a core purpose for the BBC – not a bolt-on.

This territory is not new – we're not starting with a blank sheet. We are building on the kind of role the BBC has already played in developing and promoting emerging technologies in recent years. Six years ago we launched Freeview in partnership with Crown Castle (now Arqiva) and BSkyB. (ITV and Channel 4 have since joined the partnership.) It is now the UK's largest digital television platform.

Six months ago we launched Freesat, the digital satellite TV service, in partnership with ITV. It hit 100,000 sales in fewer than five months and is proving very popular with viewers who want high definition TV without subscription.

Our research and innovation team is currently leading the development of new HD services on Freeview, in agreement with the other public service broadcasters and Ofcom.

The BBC has played a similar role in the development of DAB digital radio and internet radio. Despite the recent troubles in the commercial DAB sector and the withdrawal of Channel 4 from the market, DAB is now in nearly one-third of homes and is very popular with listeners who like the greater simplicity and choice it offers.

And the BBC has a major role to play in delivering broadband Britain. The phenomenal take up of the BBC iPlayer confirms the level of interest. The online TV catch-up service has served more than a quarter of a billion items of content since it launched last Christmas. The first episode of the new series of Top Gear (series 12) performed exceptionally well on the iPlayer, with nearly 840,000 requests to stream/ download in its first week of availability.

Underpinning these advantages are two key BBC strengths: our relative economic stability; and the power of our content to drive take-up. Put together, the traditional programme strength with the 'beyond the broadcast' economic strength can benefit not just all the creative industries but Britain as a whole.

Using our secure funding

In the current economic climate we are more conscious than ever that the BBC is enormously privileged to have the huge advantage of secure funding.

Although, for the record, I should just point out that we do have our own problems. The fall in commercial property prices and the likely decline in BBC Worldwide's profits are the latest aspects to have a negative impact on our finances. Because of these and related factors we have to find additional savings on top of the 3% annual figure to which we are already committed. But we are in a stronger position having reduced our annual costs by more than any other broadcaster over the last four years. The BBC is getting smaller – in the three years from 2004/05 to 2007/08 we cut £350 million a year off our budgets and since 2004 we have shed 4,000 posts from the public service parts of the BBC [and a further 3,000 from commercial subsidiaries].

Nevertheless, by any standards, the BBC is privileged. Our funding is secure and with that security comes a clear responsibility that we have no intention of ducking. The UK's investment in the BBC provides an asset that should benefit the whole of the public service broadcasting industry. And we are determined that it should do so.

Our challenge now is to protect public service broadcasting for the future, and to help to sustain the UK's creative industries through the present incredibly turbulent period.

I believe we should be using our funding in a way that is counter-cyclical. Just as we did in the dotcom crash eight years ago, when the BBC was able to maintain its investment in our online service and help provide stability to UK online development as a whole.

Again, this is an example of turning things inside out. We used to think of our online site as a walled garden, designed to keep people in. But now, provides many links to external websites. Of the click-throughs to these links, around 16 % are to newspapers.

Championing public service broadcasting

We also link to the sites of other public service broadcasters. But so far the results are less impressive. Currently fewer than 1% of click-throughs are to other PSB sites. I think we can, and should, improve greatly on that. The challenge to us is how to use the power of the BBC to benefit the whole of PSB. How, also, to use the BBC's investment in R&D or broadband services to benefit others.

All this demands a new mindset. Instead of seeing ourselves as a competitor, the BBC should see itself as a partner of other public service broadcasters.

We should be underpinning rather than winning.

The BBC Trust has challenged us to take this different approach: to explore new ways of helping to bring the benefits of the BBC's scale and public investment to the whole sector.

We call it "The Power of Partnerships" and in preparing the BBC's response to Ofcom's consultation on the future of public service broadcasting, we began working on a range of ideas. Ideas that would make a significant financial contribution to the industry and benefit audiences.

One of the key tests these ideas must meet is that they should be strategic. In other words, it's not good enough to offer just a temporary plugging of a hole. Our proposals need to stand a good chance of keeping public service broadcasting sustainable in the long term. They need to be flexible enough to adapt to significant and unpredictable changes in technology and they should provide a pathway for PSB all the way through linear television switchover into a high-speed broadband-enabled UK.

The Power of Partnerships

We've been developing these ideas in recent months and although it's too soon to announce details of specific partnerships, I can tell you a bit more about the directions our thinking is taking us.

Some of the ideas could have an immediate economic impact for other broadcasters.

In digital production, for instance. The BBC's investment in digital media to meet our own productivity and efficiency targets is a valuable resource. Sharing our knowledge and expertise would help other PSBs to migrate to new digital platforms and make savings that would make their own budgets go further

The BBC's R&D know-how is a huge asset for us to share. I've mentioned our role in collaborative initiatives such as Freeview, Freesat and HD – and there's more, such as DIRAC, the video compression technology, which is having a dramatic impact on everything from internet streaming to HDTV and electronic cinema.

We can make a wider contribution in new media, working in partnership to develop open-source standards and approaches that will benefit everybody.

Partnerships don't just have to be with other broadcasters. By working with museums, galleries and other creative partners the BBC could help to make an increasing range of content available to the public. We could share content, navigation systems and other resources to achieve this.

On the world stage, BBC Worldwide could use its scale and leverage to explore opportunities with other public service broadcasters and the independent sector. From our experience, we believe that this kind of partnership can bring real financial benefits to other broadcasters. It would also increase the impact of the UK's creative industries around the world.

And in the longer term, there are more ways in which we can extend public value through partnerships here at home.

There is much the BBC can do to achieve the goal of universal broadband access, working in partnership with other PSBs and internet service providers. In particular, we would like to see a simple, open standard to deliver on-demand access to TV sets.

Summing up

As I said, you can expect to hear more details of specific partnerships soon.

But the principle is established: build public value. Not just through investment in wonderful programmes and support for the best of British creative talent. But also by moving beyond the broadcast. Turning the BBC inside out so it can use its muscle for the benefit of the whole UK public service broadcasting. Being the catalyst for creative clusters. Supporting the whole creative economy. Equipping us all to meet the challenge of global competition. And making public service broadcasting resources go further, whether from the commercial or licence fee funded sector.

If we can do this successfully I believe millions of viewers, listeners and online users stand to benefit, as will the media industry as a whole.

And finally

Before I step down from the podium, one final (shameless!) plug for next Thursday's performance by the BBC Scottish Symphony Orchestra. Ilan Volkov really will be here with his baton, conducting music by Stravinsky and Rachmaninov. A Russian Winter from the heart of Glasgow.

"Unquestionably a highlight of Scotland's concert season," says the Herald. Available on BBC iPlayer. Don't miss it!

Thank you.