The most clued-up online music site/magazine PlayLouder has been experimenting with digital delivery for a while now. Their Singles Club provides 3 free downloadable tracks each month(ish) as promotion for their live nights at the Barfly in London (this being, for example, the first place I heard The Darkness, in the middle of last year). The Digital Singles collection offers exclusive, pay-for-download (via SMS, PayPal or credit card), unrestricted tracks from The French, Guided By Voices, Mr Scruff and others.
Now they are about to launch PlayLouder MSP - "the world's first music ISP" - at a comparable price to standard UK broadband. This service will attempt to create a self-contained, high-speed P2P network, while paying royalties to the publishers and record labels for the transferred files. The coolest marketable bands (think The White Stripes, Pixies, Interpol, Underworld, Soulwax, Mr. Scruff, Elbow, Coldcut, Badly Drawn Boy, Sigur Ros, Laurent Garnier, Basement Jaxx and Dizzee Rascal) and independent record labels have signed up already, and discussions are said to be underway with the major labels.
On the downside, users may not be able to access external P2P networks at all - "We aim to prevent close to 100% of P2P traffic from going outside the MSP 'walled garden'." - which could have major consequences for freedom of information and the privacy of those involved. In fact, there's no mention of the 3 P's - privacy, percentages (ie royalties) and porn - at all in the FAQ or press release. Maybe they're hoping no-one will notice.
According to the Music Week article, PlayLouder MSP is a collaboration between PlayLouder and State51, publishers of the Knowhere Guide to the UK - which is always amusing to read through the user-created information and find out how much they slagged off your home town.