The Beeb's Online department has grown haphazardly since the mid-1990s. Now, it is being forced to get back to basics and to come up with a clear strategy for the future
A quarter of a century after the first .co.uk internet domain name was registered in Britain, the internet is now more valuable to the country's economy than the transport, construction or utilities sectors.
That was the conclusion of The Connected Kingdom, a report commissioned by Google and published by Boston Consulting Group (BCG) at the end of last year.
BCG claimed the internet sector in the UK was worth £100 billion (Dh595.97bn) a year or 7.2 per cent of GDP, almost as large as the UK financial services sector.
Certainly, the UK's population has taken the internet to heart, with more than 19 million of the UK's 26 million households having an internet connection.
Last week, the Daily Mail, Britain's second-biggest-selling daily newspaper, revealed its website had 3 million daily visitors.
And yet in the same week the BBC, which claims 30 million unique users a week to its websites, confirmed it would cut 360 jobs in its BBC Online arm.
The cuts are part of a move to reduce the department's budget by 25 per cent to £103 million before 2013 and had been expected since last July.
Nevertheless, there was some surprise at the sheer number of sites - 170 out of 400 - that would have to go.
Two things are going on here. The BBC Online's department had been growing since the mid-1990s in a haphazard way, and made very little sense to people both within and outside of the organisation.
Last year, the BBC struck a deal with the government over its licence fee, which means it will have to cut budgets and start doing, in the words of Mark Thompson, its director general, "fewer things better". It agreed to streamline, but it was high time that a coherent strategy was imposed on the baggy monster that Online had become.
The second issue is that the BBC is under fire from commercial media organisations who accuse it of competing unfairly with them, while being funded by a tax on every household. Local papers, which have struggled through the collapse of classified advertising, say they have been doubly hurt by the Beeb's local websites and news, staffed by an apparent cast of thousands.
Mr Thompson has already acknowledged this predicament and this week's pledge to cut back on local news sites, and never to create rivals to Facebook, Wikipedia or Spotify is part of a crusade to counter these criticisms.
The problem is that in taking the axe to BBC Online, the BBC's timing is not great. A third of the job cuts will fall in future media and technology development, just at the point that other media and content organisations are stepping up their investment in technological development.
As the BCG study described, the internet has forced almost all businesses to change how they operate. Media businesses are still working out how to make the most of the opportunities. At least with commercial companies, there is a clear guide to success on the internet. You can't argue with profits. The BBC does not seem clear on what its benchmark of success should be.
There has long been a debate about whether the internet has changed things fundamentally, or is simply a better, faster tool for doing the same thing. Arguably, the BBC should see the web as simply another pipe down which to deliver well-produced and crafted content.
Even with its wings clipped, it will still be the biggest online news and online video provider in the UK, says Ian Maude of Enders Analysis.
The changes may seem brutal now but the opportunity to concentrate on a clear strategy could prove to be a turning point for the Beeb.
Already, 2011 has been designated the year of the social network IPO (initial public offering). Stand by for floats of LinkedIn and possibly Facebook. This will be a huge boon to both the technology sector and the financiers who have been casting around for a high-stakes, high-rewards opportunity.
While the focus shifts to the internet behemoths, the BBC should get back to basics.
If it is to maintain a global reputation for journalistic and programme-making excellence, it can't afford to flirt with digital fashion.
