Publicly funded competiton for private enterprise?

Lawrence Lessing's blog has a story on record companies complaining about the BBC release fo free recordings. While the title seems a little erroneous to me ("is public domain illegal" - but the story is really about fair/unfair competition) it's an interesting issue. One comment says:

"The record companies here make a fair point. It is not that the music itself is not in the public domain, but that BBC is using public money to fund performances which it is recording and releasing for free. The record companies also pay artists to perform pieces and then release the recordings for a cost. By utilizing public money to fund competition for these recordings would be unfair. I don't think any business wants to have the government funding competition to it. However, if a private group decided to undertake the same project, it would be a wonderful idea and certainly could not be considered unfair."

But surely this is wrong-headed? The BBC was there before the private companies in many cases, further why not apply this argument to UK public/private healthcare? (does the NHS act as unfair competition to BUPA?), or roads? (do public roads in France constitute unfair competition for tool roads?). The existance of the BBC is primarily as a trusted, independent news source - and in this area it seems undisputed. One could argue that Beethoven's 5th is not in its remit. But if not, why is childrens TV? Drama? Documentary and Comedy? Entertaining the nation (and big bits of the globe) has always been part of the remit.

What the BBC does is paid for by the taxpayer and the TV license - so surely it is only a matter of time before this this archic, inefficient, socialist way of generating / distributing content will collapse in the face of the more efficient market rules everything approach? :-)