A report from business analysis firm Ovum says they think UK based Internet Service Providers (ISP’s) could bundle a silver bullet with their broadband contracts by adding a digital music service to their offerings. They argue that this would increase customer loyalty (Ovum call it reducing consumer churn), generate additional revenue per customer, reduce online music piracy and increase music industry revenue. They estimate (and they don’t say how they arrived at the figure) that direct revenues from selling music-inclusive deals could be around £103 million by 2013, representing 41% of 2009’s market.
Commenting on the report earlier this week the BPI’s Geoff Taylor said “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.”
Fair enough. But take note that Universal Music Group sponsored the report, the same UMG that are desperately worried about the collapse of their revenues, and the same UMG that are invested in Spotify, a music service that could very easily sell premium subscriptions bundled with an ISP package. This is by all indications a great idea, and would go a long way to helping the ISP community appease big music – who are accusing it if not of complicity then at least negligence in the article of stopping access to copyright infringing sites and torrent trackers like the infamous Pirate Bay – but an awareness of possible bias might encourage conservatism when looking at Ovum’s estimated numbers. There are a lot of solutions vying for the fast growing digital music dollar, it’s a market in which we’re currently diversity and innovation, and a big move like the one the BPI are advocating could seal the future of music online.