ISP Music Deals Coming This Summer

UK ISPs may be about to embark on bundled music offerings again, according to industry execs I asked whilst facilitating a panel discussion at Changing Media Summit on Wednesday.

Asked about the collapse of Sky Songs and Virgin Media’s long-under-wraps music plans, Universal Music Group’s UK digital director Paul Smernicki said: “There are positive discussions with almost all the ISPs about music being a part of their offering. I think you’ll see some announcements over the next two to three months that are positive.”

UK Music CEO Feargal Sharkey concurred with Smernicki’s estimate, and told me: “Unfortunately, I can’t go in to all the details right now, some of it’s in the public domain. Toward the end of last year, there was a roundtable of all the major ISPs and content industries across music, film, TV etc – at that last meeting about three weeks ago, it is proving really productive and really constructive and really positive.”

According to 2010 Ovum analysis commissioned by Universal, the top UK ISPs could earn £100 million extra by bundling paid music access with their broadband, and as much as £203 million by 2013, reducing customer churn by 10 percent.

When it comes to digital, the music industry isn’t focusing just on piracy legislation, which is currently logjammed again; it also wants to support new legal services, and it wants ISPs to play their part. “The business model for ISPs in this country is not looking that great,” Sharkey said at the summit. “Turns out, we have the one thing your subscribers might be prepared to pay you some extra money for.”

But, despite years of talk, ISP music efforts are still frozen…

Back in 2008, Virgin Media was all set to harness the pioneering Playlouder startup to effectively license – and, therefore, pay for – all music tracks downloaded by users on its network. But labels got jitters and that plan was abandoned, leaving Virgin Media (NSDQ: VMED) instead to announce an alternative plan that is so far vapourware.

BSkyB canned its Sky Songs in December after a year.

Now, ISPs may not need to build their own; there are several good music subscription services out there, some of which could struggle operating by themselves but which would make ideal bundling or white-label partners for ISPs.

We understand Spotify, which already has a mobile bundling deal with Three but which has made little other headway with this key part of its business, has been talking with Virgin Media about a multi-platform bundling tie-up.

Will confirmation of this be amongst the announcements expected soon?