A study has found that bundled digital music services could generate £103 million ($155 million) of potential direct revenue a year for U.K. Internet Service Providers by 2013.

Global industry analyst Ovum was commissioned to produce the study, "Is There A Commercial Argument For ISP Music Services?," by Universal Music on behalf of U.K. trade body the BPI.

Ovum found that if the six major U.K. ISPs - Virgin Media, Sky, BT, O2, Orange and TalkTalk - launched bundled digital music services in 2010, this market could be worth £103 million ($155 million) by 2013 in a medium adoption scenario. This would be equivalent to 41% of the total retail value of the U.K. digital music market in 2009.

Ovum also calculated that an accelerated service-adoption scenario could push the bundled digital music services market to as much as £203 million ($306 million) in 2013.

The study also found that bundled music services would help reduce the cost of ISP subscriber churn. It said that a big ISP could generate "indirect value of more than £20 million [$30 million] per year if its bundled music service cuts churn by just 10%."

"This report shows that the revenue potential of digital music services alone makes sound economic sense for ISPs," said Geoff Taylor, BPI chief executive, in a statement. "U.K. music companies want to innovate and develop exciting new digital offerings. ISPs such as Virgin Media have recognized that legal digital music services offer a more exciting and profitable future than continued widespread piracy."

Adrian Drury, the report's co-author and Ovum's principal analyst, added: "With the right service platform, user experience and merchandising strategy, ISPs have an opportunity to reach a green-field digital music market that mainstream download-to-own services such as iTunes do not reach today.

"The opportunity in revenue terms for the leading U.K. ISPs is compelling, and in a crowded, increasingly mature broadband market, ISPs can differentiate their value-added offerings with innovative music services."

The report coincided with a survey by government-backed watchdog Consumer Focus, which found a lack of public awareness about digital music services. It found that 40% of respondents were unable to name a single digital music service, while 85% of those who could name a digital service were only aware of iTunes or Amazon.

"The music industry is shooting itself in the foot by not promoting legal online music services," said Jill Johnstone, international director, Consumer Focus, in a statement. "If file-sharing is causing the damage the music industry claims, why aren't they putting more effort in to promoting the legal alternatives?"

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