Virgin Media's anti-piracy plan draws cheers in UK

The British recording industry is hailing Virgin Media's plans to embrace anti-piracy measures in conjunction with its launch of an unlimited music download subscription service.

Universal Music Group, home to UK hitmakers like Duffy and James Morrison, is the first major label to sign up for the service, which would provide users with MP3 downloads free of digital rights management (DRM) restrictions, as well as streaming music.

As part of its fourth-quarter launch of the music service, Virgin Media has agreed to crack down on illegal peer-to-peer file sharing across its entire network. Steps would include the temporary suspension of internet access if a customer fails to heed warning letters.

Virgin Media, which also provides telephone and cable TV services, has 4 million broadband subscribers in the United Kingdom and says its fibre optic service is accessible to 51 per cent of UK households.

The recording industry is embracing the company's planned music subscription service with more enthusiasm than the UK government's recent “Digital Britain” report, which put the onus on educational warning letters and new services to deter piracy rather than on graduated response programs.

Geoff Taylor, chief executive of trade organization the BPI, dismissed the government's proposals as “digital dithering” but applauds the Virgin deal as proof “that graduated response is a workable way forward.”

Universal Music Group International senior VP of digital Rob Wells describes the deal as a strategic move with the only Internet service provider (ISP) that offers 50 MB-per-second download speeds.

“Virgin has the only fibre optic cable network in the UK,” Wells says. “They are a haven for some large abusers of intellectual property.”

Virgin Media broadband product director Jon James says the company is in talks with other labels and publishers. EMI confirms it is in discussions.

Unlike TDC Play in Denmark, which provides unlimited DRM-protected music bundled at no additional charge to its broadband and mobile phone subscribers, Virgin Media's service is focused on generating incremental revenue from ``customers prepared to pay for a great music service,'' James says.

The company will offer two versions of the service, one with unlimited downloads and another, less expensive plan offering a set number of downloads per month. Both options will include unlimited music streams.

While Virgin Media hasn't yet released specific pricing information, the monthly subscription rate for the all-you-can-eat plan is expected to be about equivalent to the cost of two albums. The average price for a CD album in 2008 in the United Kingdom was £7.53 ($12.21; Dh45), according to the BPI.

Anecdotal evidence suggesting poor UK sales for Nokia's Comes With Music service has raised questions about the viability of services offering unlimited access to music.

Madeleine Milne, eMusic managing director for Europe, questions the mechanics of the Virgin Media offer.

“If it's truly unlimited, how will they pay the publishers?” she asks. “An unlimited model would be similar to the one eMusic had in 2000, which was unworkable from a revenue standpoint.”

Nonetheless, the Internet Service Providers' Assn. says it hopes the Virgin deal “will encourage other similar agreements.” Virgin's TV/ISP rival Sky confirms it's still negotiating with labels on its own music service, which it first announced in July 2008 but has yet to launch.

Universal's Wells says he believes Virgin's anti-piracy measures will help its music service expand the overall legal music market. Steve Purdham, CEO of We7, which operates a download store and an ad-supported free streaming service, is similarly optimistic. “The models have to be coexistent and complementary,” he says.

Virgin Media and Universal decline to discuss the revenue model in detail.

PRS for Music CEO Steve Porter says the collecting society is in talks with Virgin Media. Porter says he welcomes the new service but stresses that the services should pay rights holders a fair minimum rate per track, as well as a percentage of revenue.

“Otherwise,” he adds, “the value of the music gets lost in the overall structure.”

 

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