So you said it couldn’t happen? Well, it is going to…Wal-Mart will begin testing digital music downloads on its site from today, at 88 cents per song…this will undercut other stores like Apple iTunes by 10 cents..
Wal-Mart said it would gather customer feedback over the next few months and make any modifications before officially launching the service in 2004.
The music files will be available in WMA format. Usage rights will be uniform across the entire catalog of music, simplifying the experience of owning downloaded music for customers.
The service was developed in partnership with Anderson Merchandisers, which supplies music to Wal-Mart and Walmart.com, and will feature songs provided by Liquid Digital Media, formerly Liquid Audio. Anderson Merchandisers acquired the assets of Liquid Audio in January 2003.
Update: Glenn Fleishman says this in comments: “A friend who worked for an online division of an entertainment company and was
involved in rights negotiations confirmed for me that Apple’s 99 cents was just above
cost and that everyone was paying about the same for rights. So Walmart’s 88 cents is
probably below cost, typical for them, and it has to be a loss leader for other
business, including goosing their online sales. They can’t have negotiated prices
better than Apple et al. — it’s not in the record industries’ best interests to give
the biggest player a better price.”
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