Universal, Sky team on ‘iTunes-killer’

News is breaking that Universal Music in the UK and Ireland this afternoon announced a joint venture with Sky to launch a DRM-free hybrid subscription and MP3 download service.
For a single monthly subscription, music fans will get unlimited listening to a huge choice of songs as well as the opportunity to download tracks to own forever.  Customers will be able to choose to stream songs on-demand for immediate listening or download tracks for playback at any time, all through one subscription. A range of subscription options will be available, offering different download packages.

The service will also make it easy for users to listen to songs on a wide range of devices. Downloaded tracks will work on any MP3-compatible fixed or portable device, including iPods, mp3 players and mobile phones.  
Sky is in discussions with other music companies, both majors and independents to offer content through the service, and expects to announce further partners soon.
Universal meanwhile will offer music from its entire catlogue, including the likes of U2, Kanye West, Amy Winehouse, Mika, the Killers, Snow Patrol, Luciano Pavarotti – even ABBA. Further details, including pricing and branding, will be announced at a later date.  
Lucian Grainge, Chairman and CEO, Universal Music Group International, adds: “The new Sky service will provide a compelling digital music experience, built for the ever growing digital appetite of music fans.  In a world where a majority of UK homes have high speed broadband access, consumers will welcome a safe, state-of-the-art service and legal alternative to those services which exploit musicians without compensation.”
“It’s the first major licence deal by Universal for MP3s; and is another huge vote of confidence in the concept of download to own subscription services,” the analysts at Music Ally note, speculating the service will launch in time for Christmas.    
The online music service will be operated by a new joint venture company, in which Sky will be the majority shareholder and Universal will also hold shares.  Sky will use its expertise in the delivery of subscription services as well as in content aggregation, packaging and marketing to support the service. .
If the service does launch in time for Christmas, it’s likely to find itself competing in an increasingly crowded space, as services including Amazon, eMusic and others prepare to extend their DRM-free MP3 offering at some point, which we speculatively predict will be in or around September this year.
Whether this market activity will be sufficient to displace the dominance of iTunes we can’t say, perhaps that answer rests on just how quickly Universal, Sony BMG and others choose to license their content DRM-free through the Apple music service. Though that play may expose the music labels to criticism from digital music lovers, 50 per cent of whom use iPods in the UK, who may not choose the inconvenience of purchasing music from non-Apple services, preferring the integration offered by iTunes.

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