Wal-Mart Launches Online Music Store

from www.iwon.com

Tuesday March 23, 11:37 AM EST

CHICAGO (Reuters) – Wal-Mart Stores Inc. (WMT) on Tuesday tuned up its online music store, undercutting competitors’ prices as the world’s largest retailer officially launched a venture designed to boost its Web businesses.

The store, which sells digital downloads for 11 percent less than major competitors, expanded its catalog of artists by 50 percent, including exclusive songs from Jessica Simpson, 3 Doors Down, Shania Twain and others, the Bentonville, Arkansas-based retailer said.

Wal-Mart began testing the site, which allows customers to download a song from the Internet for 88 cents, in December.

While the new store will have the brand name of the most powerful retailer behind it, it will face off against a number of companies that are better known in the online music space, such as Apple Computer Inc.’s (AAPL) iTunes music store and Roxio Inc.’s (ROXI) Napster.

Both iTunes, the most popular online music service, and Napster charge 99 cents per song, although Napster and several other services also offer subscription options that allow users to pay a monthly fee for downloads.

Wal-Mart is the dominant force in U.S. retailing, but it was relatively late to the dot-com world and has been adding online services in hopes of boosting its Web presence. It recently started offering contact lens prescription and DVD rental services.

Wal-Mart spokeswoman Cynthia Lin declined to comment on whether the service was profitable, or on how many songs had been downloaded, but said demand “far exceeded” company forecasts. She said the music download service means Wal-Mart can offer far more titles than it can in its stores, where shelf space is limited.

Analysts have said that the goal for Wal-Mart is to bring more people to its Web site. Even if the music service sold 100 million songs, that would add up to just $88 million — a paltry sum for a company that recorded nearly $260 billion in revenue last year.

Wal-Mart said that for the next two months it would be the exclusive supplier of songs from artists carried by the Curb Records label, whose roster includes country music stars Tim McGraw and LeAnn Rimes.

Like most online services, the Wal-Mart service is aimed at users of Microsoft Windows operating system, which accounts for the vast majority of personal computers. Apple’s iTunes, by comparison, is compatible with both Windows and its own operating system.

Shares of Wal-Mart were up 12 cents, or 0.2 percent, at $58.22 on the New York Stock Exchange on Tuesday morning.

©2004 Reuters Limited.