For Broadcast July 23, 2008

Sky isn't doing a Guy Hands and attempting a makeover of a struggling record label, but its decision to take on iTunes with a subscription music service is a pretty big move.

It's a long way off its home patch but maybe that's the point. With 8.8 million TV subscribers and new subscriptions bound to slow down as the company approaches 10 million, isn't it time to move into other things?

Broadband has proved a winner: Sky is now the fastest-growing provider of high-speed internet access services, though this isn't profitable yet. The pay-TV operator has also launched online TV service Sky Player, a mobile TV service and Go! View service with Sony PSP, which offers downloads of shows such as Lost. Crucially, you don't have to be a Sky TV subscriber to use any of them.

Given the hype around bundling services and locking customers in, this may seem counterintuitive. But Sky chief operating officer Mike Darcey wants customers "wherever we can find them" and doesn't rule out bundling the music service with other Sky products down the line.

But he emphasises that the music subscription joint-venture with Universal Music is not simply a retention, or anti-churn, tool for Sky: "This is not about launching one business here and then giving it away to support another business there. This has to make money for its shareholders, and they are not just Sky."

He won't reveal the start-up cost, but it looks like Universal used its catalogue to get its equity stake. Sky is leveraging its subscription management expertise, retail brand and customer base.

Darcey is also "very open" to other partners joining the venture, whether companies with music catalogues or distributors. Don't rule out BT Vision, which shares Sky's concerns about launching a BBC-branded iPlayer on its platforms.

Naming the new Sky/Universal music service might prove crucial. Darcey says it's likely to include the word Sky somewhere. Sky for Music is one option, but given the recent rebranding of Sky Anytime to Sky Player (a bow to BBCiPlayer) I think Sky Tunes is the more likely name - with no Apple-ologising in sight.