In August, NPD Group released its Top 5 ranking of U.S. music retailers for the first half of 2008. Apple was number one and Amazon rising. In the related press coverage, Walmart, though a significant seller at number two, seemed almost a future footnote. The prevailing view was to write them off. Now, with Best Buy trying to secure its digital footing via Napster, Walmart is making moves to regain ground (or at least maintain it) too.
Following the high volume, lower price service model that Walmart is known for, they’ll compete with iTunes and Amazon on price. MP3’s will be available from the music store at 94 cents a song compared to iTunes 99 cents. Top hits will be discounted to as low as 74cents per song. Free downloads will be bundled with album purchases.
Is this the start of a price war some may ask? Probably not. With songs near 99 cents already seeming to push toward the lower boundary of most music sellers acceptable profit range, and with WalMart almost certainly eating the discount out of its share of revenues, it’s hard to believe there’s a lot of net income upside for the retailer. The price cuts seem more likely to function as a lure to book broader holiday period sales. Other retailers aren’t likely to follow. Still, with its share of music sales potentially in jeopardy from growing online offerings at competitors, Walmart is moving forward.
In addition, Walmart is also pursuing exclusive deals with select artists. Last week, for example, AC/DC released their first studio album in 8 years. Aside from the band’s website, Walmart has exclusive retail rights in the U.S. It’s available in stores, however, not as a download.
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