In order to combat piracy the UK Internet provider Virgin Media has has teamed up with Universal to offer their customers unlimited DRM-free music at a fixed monthly rate. However, as with every innovative music service, some major labels fear that Virgin's all you can eat plan will cannibalize their existing digital sales.

The Internet, MP3 players and file-sharing services have changed the music habits of an entire generation. Instead of buying a few singles or albums each year, consumers now demand unlimited access to music, without restrictions such as DRM.

In an attempt to fulfill this need and to convert illegal file-sharers into paying customers, the UK ISP Virgin Media recently announced that it will offer an unlimited music download service to all their subscribers. Such a service would allow customers to download all the music they want and keep it permanently.

Universal and several smaller labels are backing Virgin’s plan, but not all the major labels are as happy. NMA reports that insiders at EMI and Sony Music don’t think that Virgin’s unlimited download service will convert illegal music downloaders into legitimate customers. They say that the model is flawed and will hurt existing digital sales.

“We want to work with Virgin Media as a partner but any deal has to sit comfortably with how we value our assets against how it values its customers,” an EMI insider said. “We have to evaluate each deal as it comes in and make sure we’re happy with the overall value of the proposition.”

An insider at Universal doesn’t think that the worries expressed by EMI and Sony Music are justified, as customers with unlimited access will only download a few dozen tracks per month. On the other hand he stressed that it is vital for the labels to innovate and compete with piracy.

Virgin Media meanwhile is undeterred by the rift between the different labels and will go full steam ahead. They hope to release their unlimited music download service by the end of the year. “We’re forging new ground and want to provide a truly compelling offering for consumers and industry,” a Virgin Media spokeswoman said.