Spotify Could Go On Virgin Media; Virgin Wants Exclusive

Spotify and Virgin Media (NSDQ: VMED) are in talks to carry the music service to the cable company’s customers, paidContent:UK understands.

The music service could be made available through Virgin’s new TiVo set-top-box. In the U.S., the TiVo (NSDQ: TIVO) Premiere box on which it is based carries the subscription services Pandora, Rhapsody, MusicChoice, Live365 and Netflix (NSDQ: NFLX) – Virgin has not yet announced any such add-ons, although it wants to.

We understand negotiations revolve around Virgin Media wanting UK exclusivity on offering Spotify – that’s something Spotify may be reluctant to give but which, having announced no such deals in over a year, it may need to.

Spotify tells paidContent:UK: “We’re in talks with a lot of companies as we look to bring Spotify to more and more people, but we’ve nothing imminent to announce.” When paidContent:UK asked Virgin Media digital entertainment director Cindy Rose last week whether the TiVo might carry services like Lovefilm and Spotify, she replied: “We’re talking to everybody – all those that you named and more. We’re very open to all of them. It’s just a question of doing the right deal, making sure our customers actually want it.”

For Virgin Media, Spotify could finally realise its ambitions of offering its customers a music service, after two failed attempts. Back in 2008, the ISP was exploring a radical idea in which it would pay labels a license fee, met from add-on customer tiers, for every file they obtain over its broadband network, effectively legitimising P2P – but labels got the jitters. In 2009, Virgin said it would offer a more conventional service – unlimited MP3s for a monthly fee less than the cost of two albums – but it still only has Universal on board and the idea remains vapourware.

For Spotify, being offered through Virgin would represent its first major partner for bundled billing. For over a year, Spotify has wanted to get carried as a feature on other services’ bills – but it’s still only present on some Three phones (Three’s owner is a Spotify investor) and through Telia TV, mobile and broadband in its native Sweden. It’s been over a year since Spotify announced any such carriage deals.

Virgin had brandished last year’s unlimited-music announcement to ward off anti-piracy legislation, an illustration that ISPs can convert customers to legal digital music, obviating the need for draconian rules. Although the government bought it, that compulsion hasn’t evaporated, with the Digital Economy Act subject to a forthcoming judicial review and further parliamentary reviews of digital intellectual property law likely to re-open lobbying from both sides.

Carriage on Virgin would mean new revenue for Spotify, which already has over 500,000 paying customers, as access to the service on any platform other than desktop app requires a premium subscription. Securing Virgin Media as a partner could mean Spotify gets access to its broadband customers, its TV customers, but also its mobile customers – although it’s not clear whether its existing arrangement with Three would preclude that.

The closure of BSkyB’s own Sky Songs means BSkyB (NYSE: BSY), too, may be looking for a third-party music provider.