London – Bundled digital
music services could potentially earn ISPs in the U.K. an extra $155 million in
revenues by 2013, according to a report conducted by Ovum and commissioned by
record label trade group BPI on behalf of major label Universal Music Group.
The figure depends on a "medium adoption" scenario from consumers; an
"accelerated adoption" scenario could up the figure to as much as $306
million in 2013. The "medium adoption" figure would also be
equivalent to 41% of the total U.K.
digital music market in 2009.
The report also found that bundled music services
could reduce ISP 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
"It’s increasingly clear that it isn’t smart to be a ‘dumb pipe’. This
report shows that the revenue potential of digital music services alone makes
sound economic sense for ISPs," said BPI chief executive Geoff Taylor.
Ovum recommends that ISPs offer a subscription
service that incorporates bundled download-to-own tracks and "additional
"With the right service platform, user
experience and merchandising strategy, ISPs have an opportunity to reach a
green-field digital music market that mainstream download-to-own services such
as iTunes do not reach today," said Ovum principal analyst Adrian Drury.
ISPs were wary of the findings of the report, due to its ties to the major
"TalkTalk thanks the BPI for its strategic business advice. Though
some may 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 criminalise its biggest customers," a
spokesperson for the U.K. ISP told TorrentFreak.