Sky is launching a new music retail company in partnership with the world's biggest record company, Universal.

BSkyB and Vivendi will create a joint venture to operate the scheme; Universal will acquire equity in the company while Sky holds the majority stake. The pair said today that they hope to attract partners.

The music will be DRM-free and Universal has committed to opening its full back catalog to subscribers. Pricing and branding was not announced today. However, the venture will be a full-scale retail venture offered to other ISPs, according to Sky sources. It differs substantially from the "bundling" deal announced a year ago in France. UMG launched a similar service in partnership with ISP Neuf Cegetel, called Neuf Music. That offers unlimited access to UMG's catalog for an additional €4.99 a month.

Sky sources say that the initial fee will include unlimited streaming and a basic quantity of downloads. Higher bundles will be available for higher fees.

But is it too little, too late?

The service does not appear to offer subscribers the ability to exchange music files within the BSkyB network - something offered by licensed Korean P2P service Soribada. Research suggests 80 per cent of music downloaders would pay a tenner a month for such a legal P2P service. It's probable, then, that unlicensed sites such as Mininova and Pirate Bay will remain unchallenged as the primary destination for music acquisition.

And there's the rub. Every broadband ISP in the world offers a "music download service" ... and the supply chain doesn't see a penny in return.

Nevertheless, the backers are confident that the service would offer choice (and no strings attached) for broadband users unwilling to step into Pirate waters. ®