The essential purpose of the television licence fee is to support public service broadcasting not an organisational monopoly. It has thus been argued that independent production companies should be allowed to bid for licence fee funding – as opposed to handing the whole lot to the BBC.

Supporters of the status quo may consider this to be an outrageous proposal, but it’s nothing compared to an idea recently floated by Rory Sutherland in the Spectator:

“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.”

Okay then – let’s ask the obvious questions.

Firstly, wouldn’t this deprive the BBC of half of its income?

“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.”

Drawing on various pieces of behavioural research, Sutherland makes a convincing case for why this should be:

“In a nutshell, people spend more when they feel they can direct their spending. Millions of people would not have a mobile phone if there were no pay-as-you-go option. People would never go to Starbucks if they were billed annually.”

If it was easy to buy only the specific bits of media content that people actually wanted, then they’d be more willing to pay:

“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’. If I could buy articles one at a time, I’d pay a lot.”

Some online publications already allow for this sort of thing, but barriers remain to consumer uptake on a sufficient scale:

“Credit cards are fine if you’re buying a film for £10, but not for a newspaper article for 10p or a TV programme for 50p. The technology to microcharge already exists (my bitcoin address is in the QR code above, if you want to send me 1p). What’s missing is the critical mass.”

Sutherland’s Beebcoin system would get the charging infrastructure off the ground with a ready-made market of tens of millions of people. This would give the BBC and other providers new opportunities to make money:

“‘Viewers can wait a week to watch the concluding episode of Unfeasibly Attractive Forensic Scientists, or pay 199 Beebcoins and watch it now.’ Ker-ching! ‘This week’s Rod Liddle Uncut is available for 40 Beebcoins.’ Ker-ching!”

But, hang-on, what’s all this about newspapers and magazines using the Beebcoin system? The licence fee is there to support broadcasting, isn’t it?

Sutherland doesn’t address this point directly, but in the digital age the distinction between broadcast and print media is breaking down. For instance, the BBC runs one of the world’s most widely-read websites – a major source of competition for print and online publications. It therefore seems only fair that these outlets should be allowed to compete for a share of the licence fee.

But what about the public service bit of the formula? What’s to stop licence fee payers spending their Beebcoins on internet porn and gambling sites? In my view there’d have to be quality criteria, but given some of the rubbish the BBC already pumps out, the bar wouldn’t have to be that high.

Of course, one could just abolish the licence fee altogether and let consumers make their own choices using their own money, without any kind of state interference. However, if as a nation we decide to stick with the principle of the licence fee, then Rory Sutherland’s ingenious idea has a lot to recommend it.