Monday, March 08, 2010

BPI claim that giving them money will make money for ISPs

Having spent the last couple of years threatening ISPs without any real results, the BPI are now switching tactics, trying to persuade ISPs that the future lays with charging customers extra for always-on music:

British music industry trade body the BPI estimates that the UK's major ISPs – BT, Virgin Media, BSkyB, O2, Orange and TalkTalk – could make between £100m and £200m a year between them by 2013 by bundling legal download services with the broadband packages they already offer.

But hang on a minute - I've already got broadband. And I'm quite happy with Spotify, We7, iTunes and the other existing music services to provide my audio needs. Why would I give even more money to BT to expand my access to music by precisely no tunes?

"Pay extra every month, and get absolutely nothing extra in return."

Has anyone at the BPI ever actually run a business? Or met a person?

Still, how does the BPI expect this to work?
The report, produced by research firm Ovum for the BPI, based its revenue projection range on the basis of low (6,000 consumer sign-ups a month), medium (12,000) and high (24,000) levels of uptake of new legal download services over the next three years.

That sounds kind of hopeful.
The report reckons that the big ISPs could save as much as £20m a year by reducing churn – the proportion of customers cancelling their subscriptions – by offering such value-added services as legal downloads.

Except what drives churn is not the geegaws added to the service - remember when BT thought that people would love them forever if they got a spiffy Yahoo-provided log-in page? What causes churn is quality of connection - something that ISPs have little way of improving without actual investment - and price.

Adding music to the offering either means you've got to put the price up - "sign up for a more expensive service" - or, more likely, that the ISP will have to swallow the costs.

So, it's not just that the BPI wants ISPs to pay for policing record label copyright; they now want labels to be subsidised directly from ISP pockets.

And if adding music is so important to making an attractive package for broadband subscribers, each of the major ISPs would have to offer tracks, thereby meaning nobody would have an advantage, and all the communications companies will be shovelling cash to labels for absolutely nothing.

Ovum's report doesn't appear to explain why Playlouder's music-and-connectivity package was a flop; nor how Nokia's Comes With Music was so shunned by a market apparently keen to hand over millions of pounds for a web connection with tunes in it.