Summary:

Five months after abandoning plans to launch a service that would legalise P2P music traffic, Virgin Media (NSDQ: VMED) has finally gone pub…

Five months after abandoning plans to launch a service that would legalise P2P music traffic, Virgin Media (NSDQ: VMED) has finally gone public with the replacement – a new subscription bundle offering streaming and even download of an unlimited number of tracks. Virgin confirmed to us that the new service will use DRM-less MP3s.

Just like Sky, which trailed a new all-you-can-eat music service in February, Virgin is using Universal Music, whose artists include Amy Winehouse, as a stalking horse – the label is so far the only taker for both services. But Sky’s service is so far vapourware and Virgin hasn’t put a launch date beyond “later this year”; Virgin is “negotiating with other UK major and independent music labels and publishers to ensure it can offer a complete, compelling catalogue by the time it launches”. There will be an entry package offering a limited number of tracks, but the whole repertoire on the top package will cost less than the price of two albums, we understand.

Clearly designed to coincide with Tuesday’s Digital Britain announcement, Virgin also says it will “implementing a range of different strategies to educate file sharers about online piracy and to raise awareness of legal alternatives”. The company told us that will range from an extension of the letter-writing campaign trialled by ISPs and labels last year, “under Universal’s auspices”, to “a temporary suspension of internet access … as a last resort for persistent offenders“. It’s a carrot-and-stick approach, designed to force people away from illegal downloading and toward its pay-for package.

Short disconnections: Virgin says this will involve no “networking monitoring or interception of customer traffic by Virgin Media” – so how will it know who to act against? As in last year’s trial, monitoring will be done by the label, using third-party tools designed to track P2P transfers. France’s constitutional court last week blocked the proposed “three strikes” law, so won’t this require UK legislative reform? Unlike the French bill, Virgin’s actions would include suspension but not disconnection, a spokesperson told me. The measure could be anything from “a few minutes to a few hours”.

Last chance at monetisation?: Virgin calls this “a world first”. In fact, Denmark’s TDC ISP already operates an unlimited music bundle but, unlike Virgin’s, it’s DRM-protected. It takes a brave label to offer its entire repertoire without protection through a monthly sub – but, with the industry itself admitting 95 percent of the world’s downloads are illegal, at least this way it may get to monetise some music consumption that’s not currently being paid for. Unclear at this stage – what kind of split Virgin gives Universal, whether Universal holds a stake in the new service, as it does with BSkyB.

(Photo: Eurockeennes), some rights reserved)

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