UK ISPs Could Score With Music

LONDON -- Digital music services could generate more than £100m of potential direct revenue for UK ISPs by 2013 according to a new study1 conducted by global industry analyst Ovum, commissioned on behalf of the BPI has found.

Ovum found that if all the Tier 1 UK ISPs2 launched bundled digital music services in 2010, this 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. Ovum also calculates that an accelerated service-adoption scenario could push the bundled digital music services market to as much as £203m in 2013.

Additionally, Ovum found that bundled music services would help reduce the cost of ISP subscriber churn. A big ISP with around 3.5m customers would generate indirect value of more than £20m per year if its bundled music service cuts churn by just 10%.

Ovum interviewed several digital music service providers, content platform producers and ISPs offering digital music services today to examine the economic case for the provision of on-demand digital services by ISPs. Their report concluded that ISPs are a critical channel for the provision of future digital music services.

The revenue prospects for bundled ISP music services would be substantially increased if services were offered to consumers in tandem with meaningful action to tackle illegal music downloading.

Geoff Taylor, BPI Chief Executive, welcomed 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.”

Ovum Ltd.