What’s the problem with public service websites?

I would suggest not much.
Two things here – few news outlets in the UK are convinced that the BBC has overnight started taking seriously its distorting effect on broader media. It is the BBC making a smart gambit (for a change). The Tories are almost certain to form the next UK government and they will be gunning for the BBC, as this morning’s Telegraph points out.
Peter Kirwan sums up the approach well in the Press Gazette, but the gist is that the Beeb has offered up a sacrificial limb or three. The loud response from its fans, especially those of BBC 6 Music, should raise doubts as to whether any of these ‘cuts’ will see the light of day.
Secondly, RTE’s hybrid funding model muddies the water somewhat for the purposes of any comparison with the BBC. It is very difficult to argue against a supposedly public-service broadcaster engaging in commercial sidelines, such as RTE.ie/news, when the status quo is that more of the public service activities are paid for by advertising than by the licence fee.
As for Adrian Weckler’s post, which Hugh references, it definitely raises some interesting questions, but his statement that “it is RTE’s commercial spin-offs, more than any other entity, that are behind the demise of newspapers’ potential survival” ignores years of underinvestment and lack of imaginative management by newspapers in Ireland and worldwide, ignores the decamping of classified advertising to free sites such as craigslist and gumtree — nothing to do with RTE or BBC —  and rather hyperbolically overstates the importance of RTE in the Irish media ecosystem. If free online news sites were that threatening to commercial media interests in Ireland, it would make it profitable for somebody to fill the gap even if RTE vacated it. A similar situation exists in the UK – the Guardian has committed itself to staying outside a paywall because it does not want to “close off journalistic options”, despite how many other outfits follow Rupert Murdoch’s lead.
The second problem I have with Adrian’s argument is that he suggests that RTE.ie is an entirely separate commercial body, but doesn’t clarify where its profits go. If someone on the Authority is pocketing them, that’s one thing. If they reduce the burden on the licence fee payer of paying for RTE’s actual public service commitments, what’s the problem? The RTE Guide has long existed as an entity separate to RTE’s core public service duties yet never seemed to attract this much attention.
As an aside, Adrian’s post also raises the point that RTE’s website news staff are paid less than those who work in the TV and radio newsrooms. If memory serves, a similar split long existed between employees of ireland.com and those Irish Times journalists who worked in D’Olier Street. It has certainly been an unfortunate fact of life on this side of the channel. Can Adrian confirm that no Thomas Crosbie Media holding enforces such a sliding salary scale for its web-only employees?
There is certainly an interesting public service argument to be had here, but it will be much more beneficial to the diversity and future of Irish media if the vested interests Hugh refers to — purely profit-driven companies, such as Adrian’s employer, and effectively charitable enterprises, such as the Irish Times Trust — put their cards on the table.
I completely agree with Hugh that RTE has failed to engage publicly about the best way to maintain a vigorous and diverse media into the 21st century and would love to see them experiment more along the lines of BBC, with iPlayer and Project Canvas. But for Irish media in general to  “move out of its habitual defensive crouch on these issues” the Times, TCH, the Independent and the rest are going to have to meet RTE a little closer to halfway.