When the ISP Met the Record Label

I’ve been meaning to write up some notes from the London Calling conference which I spoke at on Friday, but I’ve so busy over the last few days I’ve only now found time to do it.

The uber theme that permeated most discussions (on stage and off) this year was ‘working with ISPs’ with debates ranging from enforcement through to new services. The BPI’s chief exec Geoff Taylor and British Music Right’s chief exec Fergal Sharkey both spoke at length about the intensive ongoing discussions they are having with ISPs. Licensing discussions for ISP music services are right in the mix with enforcement conversations. It was made abundantly clear that houses need putting in order by the 1st April 2009 else face the alternative of government legislation. Attitudes to the ISPs among delegates ranged from suggesting that they should be sued immediately (instead of the users) through to them not being responsible for the traffic on their networks.

Taylor and Sharkey both suggested that they expect their ISP conversations to bear fruit sooner rather than later, with Sharkey going as far as to suggest that they could even be in the position of announcing a new service with an ISP within “four weeks or so”. He also stressed that the conversations are so volatile that that date could equally be missed easily.

So what sort of services would work for UK ISPs? The short answer is that one size does not fit all. Each ISP has a unique footprint and services should be optimized accordingly. e.g. those with mobile interests such as Orange should focus on using mobile to strengthen their portability story. ISPs with significant numbers of customers on higher speed tiers (and thus higher spending power) should consider more segmented offerings to leverage higher spend potential, whilst those with a focus on the value end of the market would be best suited to a free access service.

Of course the UK ISPs (and most European ones) have been burnt once with digital music already with the OD2 generation of white labeled services. They know that to make this work now, the services must tick as many of the following as possible:

• Genuinely compete with Apple
• Be compatible with iPods
• Offer something Apple doesn’t
• Have something that is free or near-to-free
• Be DRM-free

Of course (realistically speaking at least) not all those boxes can be ticked with any one service. Thus expect to see a mix of those feature sets segmented among different offerings with different ISPs. Indeed, diversity is key – the UK ISP market is so competitive and mature that any music offerings must meet any one ISP’s need to differentiate from their competitors and ideally help that process.