BPI: U.K. ISPs COULD EARN BIG
BUCKS FROM MUSIC BUNDLING

Bundled digital music services could potentially earn U.K.-based Internet Service Providers with up to $155 million in additional revenues by 2013, according to a report commissioned by record label trade group BPI on behalf of Universal Music Group.

The figure depends on "medium adoption.” With "accelerated adoption," the total could climb to as much as $306 million. The "medium adoption" figure would equal more than 40% of the total U.K. digital music market in 2009.

The report also found that bundled music services could help the ISPs lower subscriber churn rates.

"A big ISP with around 3.5 million customers would generate indirect value of more than $30 million per year if its bundled music service cuts churn by just 10%," the report states.

Added BPI’s Geoff Taylor: "This report shows that the revenue potential of digital music services alone makes sound economic sense for ISPs."

The report, prepared by independent survey company Ovum, recommends that ISPs offer a subscription service that includes both bundled downloads and "additional recommendation-driven retail."

"With the right service platform, user experience and merchandising strategy, ISPs have an opportunity to reach a digital music market that mainstream download-to-own services such as iTunes do not reach today," added Ovum principal analyst Adrian Drury.

Predictably, ISPs were skeptical of the findings, due to the report being commissioned by a major label.

A spokesman for on U.K. ISP said: “Some of us question the value of such insight from an industry which has failed to acknowledge the impact of new technology on its own business models and is pressing the government to criminalize its biggest customers.”

Ouch.

The record industry has been trying for some time now to get ISPs to charge its customers for online music services as a source for revenues to offset illicit file-sharing..