Woolworths targets digital music rivals with price cut

For a limited time only...

By Tony Smith • Get more from this author

Posted in Financial News, 25th February 2005 11:33 GMT

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UK retail giant Woolworths today put pressure on rival - and better known - online digital music services like Napster and Apple's iTunes by offering sales tax-free downloads, bringing the per-track price down to 67p.

Albums are similarly reduced, to £6.80 from £7.99.

There's a catch, of course: the new price is only available for the next six weeks. Woollies is simply absorbing the 17.5 per cent VAT due on each download itself as a loss-leader to encourage sales.

Evidence from similar price-cutting schemes put in place by other music providers suggests that Woollies' move will indeed increase the number of downloads from its online music store, Download@woolworths.co.uk. Whether the uptake is sustainable after the price returns to 79p a track is open to question, however.

Woollies claimed the temporary "best price ever" made Download@woolworths.co.uk the cheapest digital music provider in the UK, but Wippit was still charging 29p for a small selection of songs and 49p for others last time we looked.

Still, the High Street retailer said it expects other services to follow its lead - though it said so primarily because it hopes such a move on their part would validate its own. Woolworths' new channels director Anthony Moore pledged to support the six-week price reduction with "an extensive online and in-store advertising campaign as well as slots on commercial radio and a flyer campaign", which can't help but raise the public's awareness of music download services in general.

Woolworths opened Download@woolworths.co.uk in October 2004. It offers songs encoded in Windows Media 10 format, for PC users only. ®