The British Phonographic Industry (BPI) has estimated that UK ISPs could generate direct revenue of £103m from legal digital music sales by 2013. The study, which was conducted by Ovum, found that such figures would be possible, but only if all of the country’s six largest providers ( Virgin Media , Sky Broadband , BT Retail , O2 , Orange and TalkTalk ) launched bundled digital music services this year.

The market could be worth £103m by 2013 in a medium adoption scenario, equivalent to 41% of the total retail value of the UK digital music market in 2009. However Ovum also calculated that an accelerated service-adoption scenario could push the bundled digital music services market to as much as £203m in 2013.

The move, a clear effort at appealing to the allegedly "large profits" making potential of major broadband providers, also claimed that introducing bundled digital music services could help to reduce ISPs churn (lost customers). Ovum adds that big ISP (around 3.5m customers) would generate indirect value of more than £20m per year if its bundled music service cuts churn by just 10%.


It's worth pointing out that Virgin Media still has yet to get its legal music service off the ground (here), largely because of some apparently rather overzealous Rights Holders in the music industry, and is perhaps not the best example to be using.

Likewise calling any broadband ISP a "dumb pipe", which is probably aimed at TalkTalk UK more than most, if they don't play ball isn't going to win anybody over and appears to be a somewhat ill advised attack.


Estimates like this can of course be quite wide of the mark, especially given the lack of example services today (except for Sky Broadband , Sky Songs), but it would indeed be fair to say that ISPs should benefit from being able to offer their own legal alternatives; much to the annoyance of some existing legal digital music sites.

Ovum considers the blueprint for success is for ISPs to pursue a strategy based around a subscription streaming service incorporating bundled download-to-own tracks and additional recommendation-driven retail. The revenue forecasts assume adoption of a recommended best-practice strategy of a low cost, £6.49 per month (medium-level) service, delivering premium streaming with limited download allocation, and a defined additional retail target per user per month.