Kate Bulkley, Media Analyst.

Sky enters digital music market

By Kate Bulkley

Broadcast News

For Broadcast July 22, 2008

Amy Winehouse

Sky is moving into the music market by launching a online subscription service later this year with Universal Music.

The as-yet-unnamed service will include tracks from artists ranging from Amy Whitehouse to ABBA. It will be available to both Sky subscribers and non-subscribers and is likely to offered as part of a bundled Sky offer in the future.

The new service will be a standalone joint venture company that is majority controlled by Sky but in which Universal - and possibly others - has an equity stake. Sky hopes many, if not all the major record labels, will offer their catalogues on the service. The entire catalogue of Universal Music artists will be made available.

Sky did not disclose pricing levels for the service, but said there will be several subscription "tiers", with the higher-priced tiers giving consumers access to a greater number of downloads.

All subscription levels will allow unlimited streaming of the Universal catalogue on-demand but if customers want to keep tracks they have to download them. Following the current trend in the digital music business, downloaded tracks will be free of DRM (Digital Rights Management), meaning they can be downloaded onto any MP3 player-compatible device.

"We think that a subscription model that allows unlimited streaming combined with DRM-free downloads is compelling," said Mike Darcey, chief operating officer of BSkyB.

"There is a certain association with iTiunes about constraint whereas what we want to do with this is to offer freedom and flexibility. iTunes will charge ahead and be successful, but we will be doing something else and I think we will be successful too."

Darcey said that Sky will consider bundling the new music service in with other Sky offerings but that he doesn't want to limit the service initially. "We are the fastest growing broadband provider in the UK with 1.5 million customers but there are 24.5 million other households in the UK and I don't want to cut them out," said Darcey.

"I want this to be big. I want to sell services to everyone and if I can get good penetration by bundling it with Sky Broadband or Sky TV then I will do that. But I am not going to do that to the exclusion of other opportunities."

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