• by Paul Gough , November 13, 2003

Move over iTunes. Take a nap Napster. Wal-Mart's coming to town.

Those four words have struck fear in the heart of many a retailer over the past two decades and now it's poised to strike some e-tailers. It's a familiar scene. Wal-Mart arrives. Smaller stores lose customers, lose market share - sooner or later, lose business.

Now comes word that Walmart.com is planning its own music download service in a partnership with a company that recently bought Liquid Audio's digital music business. The new service's library reportedly would contain 200,000 tracks to start. The service could launch as early as next week, The Wall Street Journal reports.

Should Apple, which runs iTunes, and Roxio, Napster's parent company, be worried? Walmart.com is apparently taking a page from the strategy book of its brick-and-mortar sibling by undercutting iTunes' price of 99 cents a track. An exact price wasn't disclosed but the industry floor appears to be RealNetwork Inc.'s Rhapsody, which offers tracks at 79 cents each following a $9.95 monthly subscription fee.

While Wal-Mart wouldn't comment about the online music service, it's clear that the Bentonville, Ark., retailer sees the future for its CD business. There may not be one. Jupiter Research estimates $35 million in legally downloaded music will be sold this year. That's small right now compared to the $12 billion music industry, but digital music is climbing the charts with a bullet. With mp3 players getting cheaper, at least one Internet connected computer in six of 10 houses nationwide, and broadband penetration increasing, CDs could go the way of the vinyl record.

Either Wal-Mart wants to dominate the market or they don't want to miss the boat.

Probably they don't want to miss the boat. A lot of retailers see the writing on the wall, and are trying to get in front of digital music. Best Buy, which is one of the nation's top CD retailers, gives a demonstration of Rhapsody prime placement in its stores. And there's no shortage of legal downloadable music sources on the Web. Every week or two seems to bring news of another service.

Wal-Mart isn't likely to dominate the market, even with the lower prices, especially if it's as selective online as it is in its store. You're not going to find The English Beat's seminal ska revival album "I Just Can't Stop It" at the Wal-Mart Superstore in Presque Isle, Maine, for example. (You can find it on the Web site, however.) And forget finding Victory Gardens, the debut album of folk rockers John and Mary, anywhere, even on the Web site. A downloadable music service could, conceivably, have both if the rights are secured.

And if you can get your hands on either album, I highly recommend them.

--Paul J. Gough