ultimatejester
12-19-2003, 03:42 AM
Wal-Mart, the world's largest retailer, has jumped into the online music market by launching a download service with prices that undercut rivals such as Apple's iTunes music store and Roxio's revamped Napster site.
US consumers can now purchase songs on Wal-Mart's music site for 88 cents a track, compared with the 99 cent standard established this year by Apple. Wal-Mart appears to be betting it can use its vast scale to push prices down to levels at which rivals cannot compete.
The world's largest retailer stressed that it was offering downloadable tracks on a trial basis so that it could gather customer feedback and make necessary changes before officially launching the service early next year.
The retailer is the latest company to push into digital music sales and some analysts are already suggesting many online music retailers will not survive the inevitable consolidation.
Wal-Mart's service is compatible only with computers running Microsoft Windows and music players that operate on the Windows Media Audio format. That excludes consumers with Apple computers and iPod music players.
The technical details are likely to insulate to some degree Apple's music store from Wal-Mart's competitive pricing, but the retailer could nonetheless force rivals to drop prices.
Steve Jobs, Apple chief executive, said in a recent interview that his company's music store was not very profitable, but boosted its earnings by driving sales of its popular iPod music player.
Apple has sold more than 25m songs since launching its music store this year.
Wal-Mart would not say whether its new music site would be profitable selling single songs at 88 cents and albums at $9.44. The company also declined to discuss whether Wal-Mart had secured more favourable terms from top record labels.
Phil Leigh, analyst at Inside Digital Media, said 88 cent downloads would clearly attract customers to Wal-Mart's music store, but consumers would not return to the site if it did not offer an easy-to-use interactive "buying experience".
"Apple is insulated a bit, but I think that the others could be impacted to varying degrees. A lot will depend on the experience the consumer gets on these sites," said Mr Leigh.
Wal-Mart's online music store is run by Liquid Digital Media, a division of Anderson Merchandisers, a private company that already supplies compact discs to the retailer. Anderson acquired Liquid Digital Media in January in the hope of moving into online music distribution.
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US consumers can now purchase songs on Wal-Mart's music site for 88 cents a track, compared with the 99 cent standard established this year by Apple. Wal-Mart appears to be betting it can use its vast scale to push prices down to levels at which rivals cannot compete.
The world's largest retailer stressed that it was offering downloadable tracks on a trial basis so that it could gather customer feedback and make necessary changes before officially launching the service early next year.
The retailer is the latest company to push into digital music sales and some analysts are already suggesting many online music retailers will not survive the inevitable consolidation.
Wal-Mart's service is compatible only with computers running Microsoft Windows and music players that operate on the Windows Media Audio format. That excludes consumers with Apple computers and iPod music players.
The technical details are likely to insulate to some degree Apple's music store from Wal-Mart's competitive pricing, but the retailer could nonetheless force rivals to drop prices.
Steve Jobs, Apple chief executive, said in a recent interview that his company's music store was not very profitable, but boosted its earnings by driving sales of its popular iPod music player.
Apple has sold more than 25m songs since launching its music store this year.
Wal-Mart would not say whether its new music site would be profitable selling single songs at 88 cents and albums at $9.44. The company also declined to discuss whether Wal-Mart had secured more favourable terms from top record labels.
Phil Leigh, analyst at Inside Digital Media, said 88 cent downloads would clearly attract customers to Wal-Mart's music store, but consumers would not return to the site if it did not offer an easy-to-use interactive "buying experience".
"Apple is insulated a bit, but I think that the others could be impacted to varying degrees. A lot will depend on the experience the consumer gets on these sites," said Mr Leigh.
Wal-Mart's online music store is run by Liquid Digital Media, a division of Anderson Merchandisers, a private company that already supplies compact discs to the retailer. Anderson acquired Liquid Digital Media in January in the hope of moving into online music distribution.
http://news.ft.com/servlet/ContentServer?p...d=1071251652371 (http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1071251652371)