Universal and Virgin Launch New Subscription Model

This June, Universal Music Group (UMG) announced it would be pairing with Virgin Media, the U.K. based telecommunications giant, to offer Virgin Broadband subscribers unrestricted access to UMG’s entire catalogue for a monthly-added fee. While the exact amount of this fee has not been officially disclosed by either company, the BBC has quoted Virgin as saying this fee will likely be near the cost of buying a few albums [1], or according to the Wall Street Journal, around $25 per month [2]. Pricing is also likely to be tiered, with at least one less expensive option for the more conservative of music downloaders.
In return, Virgin Broadband has said it agrees to discourage illegal file sharing among its subscribers by temporarily suspending service to those users discovered by record companies engaging in copyright infringement. A spokeswoman for Virgin suggested that the length of such a suspension could last “as little as five minutes, an hour, or a day [3].” She added that they would initially execute the penalties on a trial basis, and there is a possibility of no such penalty being enforced. The likelihood of penalties becoming more severe is quite small, given that U.K. broadband customers are charged on a per-usage basis.
Industry experts and U.K. government officials are praising the deal as the first of its kind brandishing a long-debated ISP-Publisher concurrence in terms. Earlier this year, Virgin Media decided to kill off its plans of a similar music download service when Sony and Universal demanded that Virgin agree to block file uploads and downloads from users’ PCs. It seems in hope of re-monetizing their assets in a digital environment, UMG and other music publishers might be willing to slightly loosen their grip.
Indeed, this marks the first occasion of a deal struck between music publishers and Internet service providers that would give users this kind
of access. Apparently, all tracks will be in the .mp3 format and fully DRM-free, streamable, and downloadable for use on users’ portable music devices or burning CDs. It also hints that ISPs of the future may become more active in discouraging file sharing on their networks by penalizing users for copyright infringement.
However, it remains to be seen how Virgin Broadband customers will take to such an offer. Essentially, subscribers who have an established behavior of downloading or torrenting their favorite albums illegally will now be obligated to purchase the service to remove the threat of their connection being suspended. Alternatively, avid-downloaders will simply switch ISPs. If this happens, Virgin’s competitors are unlikely to duplicate this new service model without further pressure from music publishers or from the government. Another obstacle looms: Virgin says it has been in talks with the other major labels for inclusion in their new yet-to-be-named digital music service and this comes as no surprise. Without the other big three, Virgin’s new service will likely sink without a vast and inclusive library. Launch is scheduled before Christmas 2009.

by Michael Benson

[1] Cellan-Jones, Rory. “Anti-Piracy Music Deal for Virgin.” BBC News. 15 June 2009. 20 June 2009 .
[2] Fanner, Eric P. “Universal Music and Virgin Reach and Download Deal.” New York Times. 16 June 2009. 21 June 2009
[3] Meyer, David. “Virgin-Universal deal may hit ‘persistent’ file sharers | Digital Media – CNET News.” Technology News – CNET News. 15 June 2009. 24 June 2009 .



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