Soho’s Nathan Barleys were in mourning yesterday after Ofcom chief Ed Richards abandoned his shape-shifting flagship, the “Public Service Publisher” quango.

Richards said in a speech to the Royal Television Society on Tuesday night that the “the PSP as a concept has served its purpose and we can move on to the relevant questions for today”.

Translated from PR-speak, that means the game is up for the much-derided idea. (It’s been called “Welfare For Wankers”.) So what is the PSP and why did it create such a passionate response from Reg readers?

When the idea was first floated in 2004, it was as a TV commissioning agency for worthy “public service” programming, with a budget of about £300m a year. It was needed, Ofcom explained, “to ensure that the necessary level of competition for quality in public service broadcasting continues through the transition to digital”.

The BBC helped shoot that down, but Richards couldn’t let the idea drop. The PSP was revived, only this time encumbered with Web 2.0 buzzwords – and in one of the most spectacularly naff policy proposals ever made, emerged as a quango for New Media types, with an annual budget of £100m mooted.

“It’s a new media answer to a new media question,” is how Ofcom described it, tautologically.

The argument was that the “market” for worthy new media projects had failed, and that British internet users were too stupid to find it for themselves on Google.

A year ago, we invited readers to tell Ofcom what it thought as part of its consultation process – with hilarious results:

“As a self-actualising media node, I welcome this redistribution of government funds from provincial luddites to new media ‘creative’ Sohoites…

“Cool Britannia lives! The creative industries initiative was good but didn’t radically empower young creatives and their 360-degree thinking. Unleash the collective wisdom of new media and see us swarm!”

“Let’s use those redundant factories to turn out polyphonic ringtones.”

Ofcom coolly ignored the hostile responses, claiming the public supported the concept. Senior BBC web luvvie Tom Loosemore was hired to strategise on what he described as a “visionary and transformative” project.

But after MPs savaged the idea last autumn, Richards had little option but to find a graceful exit.

“Geoff Metzger, managing director of the History Channel, perhaps summed it up best when he said that the public service publisher was a ‘cure with no known disease’,” the Commons Select Committee for Culture, Media and Sport concluded.

Yet even then, so many of New Labour’s new media types found the idea of a cash trough so irresistable, that the corpse of the PSP was still being given electric shocks.

“To really move on, the creative industries need to get past special pleading and on to a sound intellectual basis regarding the encouragement of, and support, for risk and how to measure results,” pleaded Lord Lilley of Webquango, one of the authors of the P2P 2.0 proposal, in The Guardian.

Having staked so much of his personal capital on the project, Richards now calls it a “rock thrown into a pool”.