Monday, March 8, 2010

New Study Shows Big Money for ISPs with Bundled Music Services

The industry analyst group Ovum was commissioned by the UK and Universal Music Group to conduct a study answering this question: Is there a commercial argument for ISP (internet service provider) music services?

What they found showed that ISPs using bundled digital music services could generate massive amounts of money - $155 million to as much as $306 million of direct revenue by 2013 to be exact. This is shown to be equal to 41% of the retail value of the digital music market in the UK.

Many of the UK's biggest ISPs, including Virgin Media, think that offering a digital music service makes a lot of sense for them, as it would potentially combat piracy and offer a legal way for users to get a lot of music. They also believe that having a digital music service included in their subscription packages would lower subscription costs because digital music would cover a lot of costs with the revenue they would bring in. It would also add a lot of value to different ISPs, creating some competition amongst them all.

What many people are arguing is that the music industry is not doing enough to make people aware of music bundling services. This survey of people in UK was pretty amazing to me: out of the variety of people surveyed, 40% could not name a digital music service, and out of those who could, 85% could only name iTunes or Amazon. This seems pretty crazy to me, but I guess it shows that if ISPs offer a music service with their subscription, more people may find they like the idea.

--Ashley Snider


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