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Last Updated: Wednesday, 22 December, 2004, 11:44 GMT
HMV moves in on download market
Record store HMV has teamed up with Microsoft to launch its own digital music downloading service.

HMV will plough around 10m into setting up the service, which it hopes to roll out by February next year.

The two firms are developing software and hardware that will allow customers to download music directly onto PCs.

HMV added the system will be compatible with Microsoft's Windows Media Audio, and therefore with 75 types of portable music players, but not Apple's iPod.

Microsoft's promotion of its Windows Media system through its domination of the global market for PC operating systems has drawn sanctions from European competition regulators. On Wednesday, the European Union's second highest court, upheld the European Commission's ruling that Microsoft should produce a version of Windows without Media Player.

'Unique opportunity'

However, the record store refused to reveal the planned price and how many tunes would be available and how much they would cost in comparison to the music available at its stores.

It's great to be involved in such a leading-edge retail project that will support an explosion of choice enabling music fans to buy music in-store and online
Alistair Baker, Microsoft
Computer giant Apple's iPod is estimated to account for 50% of the digital music player market.

The software and hardware needed to access the system will be available at the retailer's 200 stores across the country and its online shop.

"We have a unique opportunity to leverage the HMV brand, customer base and our store network to establish a strong position in the newly-emerging market for paid-for music downloads," chief executive Alan Giles said.

"It's great to be involved in such a leading-edge retail project that will support an explosion of choice enabling music fans to buy music in-store and online," said Microsoft director Alistair Baker.

HMV's move is the latest in the corporate scramble to enter the downloading market.

Last month, Tesco announced it would be muscling in on the UK online market - which it estimated was worth 25m - joining Microsoft MSN, iTunes, Virgin and a host of others.

Music downloading had quite a torrid start - with many individuals "ripping" - or loading music onto their computers for others to share on free websites.

Downloading boom

HMV's move may be a wise one, as many illegal free file-sharing websites have closed down amid fears they are about to be targeted in legal actions by record companies and so could push more people to legal sites.

UK singles sales are also on the wane - according to the British Phonographic Industry (BPI) they fell 12% between July and September alone - while downloads are surging.

In fact, the BPI did say that if downloads were included in the figures - singles sales would have seen a 9% rise.

Single tracks are more popular with portable music players which can hold thousands of single tracks.

Some singles can cost as little as 69 pence online compared to an average 3.99 in most shops.

Stepping into the world of downloading is also a clever step for HMV, which has said it aims to expand it business through the digital market.

Music sales make up 46.5% of its business; the company has been moving more into the DVD and computer game arena.

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