Business Matters is a daily column that offers insight, analysis and opinion on the day's news.
-- It is estimated that 40,000 U.K. broadband subscribers will give up their Internet service due to the cost of an anti-piracy campaign tied to the U.K. Digital Economy Bill. The cost of a letter writing deterrence campaign is said to be £1.40 ($2.24) per subscriber (per month, presumably, although this is not explicitly stated). ISPs warn the costs of measures prescribed by the bill would cost £25 ($40) per year per subscriber. In its reporting of this news, the Times writes the bill's provisions would leave consumers with a bill for £500 million ($796 million). However, the Times does not explain the math behind this figure. At the heart of this debate is a simple business rule of thumb: a project should be undertaken if the benefits outweigh the costs. Content owners have convinced legislators that certain measures need to be taken regardless of the actual costs and benefits. But the costs and benefits should be the factors driving this legislation. If the value gained by content owners is less than the cost of the anti-piracy measures, another solution should be sought. The article does point out that the government's impact assessment puts the additional revenue generated over ten years from video and music sales at £1.7 billion ($2.71 billion) and incremental Value Added Tax at £350 million ($558 million). One estimate that is lacking here: the value lost to the economy due to reduced broadband subscriptions and/or reduced broadband usage due to piracy-related suspensions. (The Times)
-- Direct-to-fan platform Bandcamp calls the quantity and variety of its physical sales, a feature launched about a month ago, "astounding." The most interesting aspect of Bandcamp's physical sales is the higher price consumers are willing to pay compared to the digital versions. It should be noted that many of the examples given by Bandcamp are for very attractive or unique physical editions. These artists are not putting out run-of-the-mill jewel cases. From the blog: "The average price paid for all these packages is more than double that of digital albums, and package sales are already 20% of overall system sales for December." (Bandcamp blog)
-- Tunesbag, a new online music services, launched last week. The site is an online music locker that allows users to store their music and play back from any web browser. The Vienna, Austria-based service is similar to Lala (without its wealth of features) and MP3tunes (without the lawsuit from EMI). A free version grants the user 1 GB of storage space. Upgrades cost €2.90 ($4.16) (10 GB), €5.90 ($8.47) (40 GB) and €14.90 ($21.39) (200 GB) per month. First impression: it's not great and is inferior to its competitors. (Tunesbag blog)
-- The Qtrax saga continues. A press conference planned for Christmas day was cancelled due to an illness of CEO Allen Klepfisz. Instead, the company announced in a blog post that it will be launching in January 2010. And, as usual, the company took the time to single out the detractors "behind curious names on blogs," underscore its fortitude and outline the obstacles it has had to overcome. In spite of great perseverance, the company has yet to launch its product. After a failed launch in the U.S. market, Qtrax set its sights elsewhere. An August announcement for an October launch in China, Hong Kong, Taiwan, Australia and other Asia Pacific markets. The company has yet to launch in those markets. (Qtrax blog)
-- Although long-term contracts are still being negotiated, ASCAP and BMI will accept a 7% reduction in rates from radio broadcasters until a court determines final interim fees in Q2 2010. The 7% reduction may be short-lived as the rate decided upon by the court will be applied retroactively to January 1, 2010. (Radio Business Report)
Follow Billboard senior analyst Glenn Peoples on Twitter at twitter.com/billboardglenn.