The introduction of the quasi-market structures presents problems that affect the ability of BBC to engage with the consumers of television content to understand their needs, preferences, and their ability or willingness to pay. For example, a smaller section of the audience could be willing to pay higher fees to watch a particular program but the broadcaster will choose to show the program with the larger audience. The lack of avenues for consumers to air their views on the programs and their willingness to pay for the television services means that BBC loses an understanding of the needs of the consumers and therefore loses understanding of public interest (Deakin & Pratten, 2000, pp.328). For the BBC, and like in any market, consumers require a mechanism for providing feedback about their willingness to pay otherwise the effectiveness of the organization in providing its services is undermined. The absence of an avenue for consumers is contrasted with subscription or pay television where consumers have the ability and willingness to pay thereby increasing the ability of the broadcaster to understand the strength of their wants and take steps to fulfill their needs. Consequently, the quasi-market structures prevent the broadcaster from putting the utilizing the programming resources in a way that will be of the highest value. The lack of a direct mechanism in BBC for establishing the needs of viewers created an obstacle for the organization when creating a program strategy (Deakin & Pratten, 200, pp.336). The program strategy failed to reflect the priorities of the audience and instead relied on the whims of the management of the broadcaster. The shortcomings of the program strategy undermine the connection between the broadcaster and the audience. The reduced power of the consumers means that program schedules are set through administrative means rather than on any feedback or research (Deakin, et al., 2009, pp.57). Since consumers lack a way of registering their tastes directly to the broadcaster, the organization fails to fulfill the market-driven objective of satisfying the needs of the consumers. Consumers of television require a system that allows them to purchase broadcasting services from a range of suppliers to meet their unique interests. Therefore, a problem created by the introduction of the quasi-market structures is the loss of consumer sovereignty. The loss of sovereignty hampers the ability of BBC to maximize the value of its production hence undermining quality standards.
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The introduction of the quasi-markets structures has an effect on the affecting the competition that exists within the market between the broadcasters. The monopoly that was enjoyed by the BBC ended in 1955 when the independent television channel ITV was established (Patterson, 2017, pp.5). Between 1955 and 1982, the BBC and ITV were the main broadcasters and this allowed them to have complete control over the programming. The two stations were vertically integrated which meant that they produced, broadcasted and distributed their own programs. Production quotas were established with the view of improving the competitiveness of the programming and weakening vertical integration in the industry. The broadcasters were henceforth required to outsource a particular portion of their production to independent companies. The mixture of regulation and competition created by the quasi-market hopes to preserve and even improve market-like relations in the market. The regulations introduced by the UK government hoped to create efficiency and stimulate creativity by promoting independent television producers (Turner & Lourenco, 2012, pp.498). However, by attempting to facilitate competition through regulation, various obstacle and difficulties arise. Firstly, the regulations worked to weaken the social democratic model that existed within the television industry between the BBC and ITV. The regulations overhauled the relationship between the BBC and independent producers since the broadcaster was required to outsource a quarter of its production to such independent companies. The regulations stopped the BBC practice of fully funding the contracts for programming and transferring the rights. Since BBC was required to outsource a proportion of its production, new questions arose about the capacity of the company to produce creative content that met the diverse needs of the viewers (Turner & Lourenco, 2012, pp.506). Consequently, any expansion of the quota that BBC is required to outsource to independent companies could hurt the sustainability of the broadcaster’s ability to produce. The new regulations exposed the BBC to new production values and the ability of the flexibility of the broadcaster was tested. As expected, the BBC faced challenges because it lacked a program strategy that was founded on public interest and viewer priorities. The regulations introduced by the government removed BBC and ITV as the main producers or content and allowed independent producers to grow in influence in the television sector.
The introduction of quasi-market structures affected the internal market of the BBC. An example related to the implementation of the initiatives such as the Producer Choice that were aimed at improving efficiency and innovation. The initiative was introduced because the BBC recognized that the changing structure of the market required the broadcaster to change its rigid structures (Deakin, et al., 2008, 64-65). The reorganization of the BBC created an imbalance in the organization since the broadcaster was viewed as big and powerful. The size of BBC created a challenge in separating the broadcast and production departments of the company. The challenge in reorganizing the BBC created new problems that negatively affected the creative processes within the broadcaster (Carter, 2013). Various departments within BBC attempted to hold on to more of their autonomy and this raised conflict. The restructuring the internal operations of the BBC created a level of displeasure among in-house content producers. The dissatisfaction forced BBC to undertake self-regulation by promising in-house producers a bigger share of the annual expenditure (Deakin, et al, 2008, pp.65). The move was also intended at reducing the intensity of the competition between the company’s content producers and the independent companies that provided outsourced content. The Producer Choice initiative and the reorganization within the broadcaster resulted in more bureaucracies that affected innovation (Born, 2004). Another aspect of the reorganization concerned the purchaser-provider split. Under the quasi-market structure, BBC needed to separate its functions as effectively as possible to create a competitive environment that enhanced purchaser-provider relationships (Deakin & Pratten, 2000, pp.334). However, there was a level of suspicion between the parties since the broadcaster and the independent producers felt that the other side could fail in their duties. The failure of the BBC to separate internal functions effectively created mistrust since the independent producers felt that the broadcaster’s internal producers were stealing their ideas. The allegations pushed the BBC to declare that it would provide equal opportunities to all providers whether they were in-house or independent. On some level, the practice helped to protect independent producers from any perceived conflict of interest when working with the BBC.
- Born, G, 2004. Uncertain Vision: Birt, Dyke and the Reinvention of the BBC, Secker and Warburg, London.
- Carter, C and Mckinlay, A, 2013, ‘Cultures of Strategy: Remaking the BBC 1968-2003’, Business History, Vol 55(7), pp.1228-1246.
- Deakin, S and Pratten, S, 2000, ‘Quasi-Markets, transaction Costs and Trust: The Uncertain Effects of market reforms in British Television Production’, Television and New Media. 1(3), pp.321-354.
- Deakin, S, Lourenco, A and Pratten, S, 2009, ‘No ‘third way’ for economic organization? Networks and quasi-markets in broadcasting’, Industrial and Corporate Change, Vol 18(1), pp.51-57.
- Patterson, R, 2017, ‘The Competition discourse in British broadcasting policy’ CREATe Working paper 2017/02. Available on Keats.
- Turner, S, and Lourenco, A, 2012, ‘Competition and Public Service Broadcasting: Stimulating creativity or Servicing Capital’, Socio-Economic Review, Vol 10, pp. 497-523.