Posted on: Sunday, December 21, 2003

Wal-Mart joins online digital-music stores

By Jefferson Graham
USA Today

Wal-Mart, the world's No. 1 retailer, has entered the burgeoning online digital music space and is undercutting most rivals on price.

On a test site that is expected to formally launch next year, Wal-Mart offers songs for 88 cents, vs. 99 cents by most competitors, which include Apple and MusicMatch.

"At 88 cents per song, we think customers will really respond to this service," says Wal-Mart spokeswoman Cynthia Lin.

Wal-Mart's service at musicdownloads.walmart.com has long been expected and is likely to take music downloading more mainstream. But while Wal-Mart rules in the brick-and-mortar world, Apple has a big head start in music downloads. And, Wal-Mart's Web site is not as strong as its store presence, ranking as the fourth most often visited site after Amazon.com, Yahoo Shopping and Shopping.com, says tracker Nielsen Net/Ratings.

Still, Ted Cohen, senior vice president of record label EMI, says Wal-Mart's entry into digital music will bring online music to middle America. "That Wal-Mart is in the business now shows the mainstream acceptance of digital music," he says.

Apple's iTunes Music Store dominates online music downloads. Since launching its service this spring, it has sold 25 million downloads. Josh Bernoff of Internet tracker Forrester Research says Apple has nothing to worry about in Wal-Mart.

"They're bringing a knife to a gunfight," he says. "iTunes and MusicMatch are complete offerings that help you manage your music. Wal-Mart's site is just a list of songs and not much more."

Wal-Mart has 200,000 songs, compared with 400,000 from most competitors and 500,000 from Roxio's Napster. Real Networks' Rhapsody sells songs that can only be copied to a CD for 79 cents.

The full Wal-Mart site will include more features and exclusive downloads from artists, Lin says. Sony and Microsoft also plan download stores next year.