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Late arrival to challenge Apple, Roxio et al

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Retail giant Wal-Mart, once again atop the Fortune 500 list, has just launched its digital musical download service.

Despite stiff competition - in the form of Apple, RealNetworks and Roxio - coupled to its late arrival in the market, Wal-Mart says that of all the people who shop in its stores, two-thirds are connected to the Internet and two-thirds of those have broadband. The punters figure Wal-Mart's purpose is less to sell songs than to sell the consumer devices that play the songs.

Wal-Mart's Music Downloads service, which has been in test mode since December, officially launched on Tuesday with no subscription fee, 88-cent downloads and the same usage rights on all tracks. The retailer offered 300,000 downloadable tracks when it started the service's test phase and now claims to be up 50 per cent, including a slew of exclusives. It's not as many as Apple yet, though.

Country label Curb Records is going digital for the first time, making its songs available for download exclusively on Walmart.com for the next two months before going for broader exposure. Curb, which will offer more than 3,000 songs, is home to country stars such as Tim McGraw, LeAnn Rimes and Jo Dee Messina. Walmart.com will also offer major label exclusives from Jessica Simpson, 3 Doors Down, Black Eyed Peas, Hilary Duff and Shania Twain.

After incorporating user feedback, Wal-Mart added a new download manager with enhanced search and browse that's supposed to make it easier to download complete albums and groups of songs.

The service was developed in partnership with Anderson Merchandisers, a company that supplies the stores and website with their music selections. The digital tracks are from Liquid Digital Media, formerly Liquid Audio, whose assets Anderson bought in January of last year.

The PC-only service offers music in Microsoft's WMA format and requires the Windows Media Player 9. Users can download the tracks to one computer and back them up on two other PCs. Each track can be burned to a CD 10 times and transferred to a compatible portable digital media player an unlimited number of times. The link to check which players work with the service includes a note saying it doesn't include the Apple iPod.

Wal-Mart may be the largest retailer in the physical world, but it's been notoriously late to the online world. Amazon was the established king of e-tail before Walmart.com rang up its first sale. Now, it's up against several brand name services that have been building their business for six months.

But Wal-Mart has something going for it that the others can't claim, a huge customer base that drove several competing retail chains and the American downtown into bankruptcy. If even a small number of Wal-Mart's fans check out Music Downloads and buy a couple of songs, iTunes will be facing some serious competition.

The company is looking to drive its customers to the site through gift cards that can be used to buy downloads. The cards are available at both Walmart.com and at Wal-Mart stores, so mom and grandma can pick up a couple at the cash register for the kids.

If Wal-Mart's lucky, it will build up its own loyal music following before Sony, Virgin and Microsoft launch their competing services later this year.

© Copyright 2004 Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of events that have happened each week in the world of digital media. Faultline is where media meets technology. Subscription details here.

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