BBC’s Move and an Emerging Network
Though network effects are often used to analyze the economic benefits within a company or industry, we can stretch this analysis to discovering effects on multiple industries and markets. When BBC moved to Salford in the UK, many economic benefits were discovered through the analysis of network effects on the market.
In response to the government’s paper on future of BBC as a corporation the KPMG produced research on the effects on BBC’s move to Salford. Research centered on whether or not BBC was crowding out commercial competition and how this would impact the market. The analysis conducted showed that the move had a positive contribution to the market; with increased employment, spill-over, and skill levels. Network effects play a role here when analyzing that 40% of the 6500 now employed at Salford are BBC employees. Through the network, the interactions of these employees with other digital sector workers in the area will attractive investment in the creative industry. Furthermore, creative industries now account for more than 5% of the employment in Salford, with growth forecasted. BBC’s move has made it a central hub for spread of creative activities through the network. Collaboration has increased due to these effects, with barriers faced by smaller, independent agencies being broken down through the spread of ideas.
This analysis has fostered academic support for the theory that when a “hub” in this case, BBC, moves in, similar organizations are attracted looking to benefit from the same type of skills and experience. BBC’s move has a triggered a network of creative industries in Salford. Perhaps we can account for the technology start-up culture growth in San Francisco with network effects as well. In general, it is worthwhile to analyze the network effects in a broader market of industries rather than centralizing on one industry in order to gain deeper insight on how economic changes are sparked.