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December 23, 2004

HMV gets a taste for Apple’s online music

UK music retailer HMV Group Plc has announced a partnership with Microsoft Corp to gatecrash Apple Corp's online music party.

By CBR Staff Writer

In a surprise move, HMV says its planned music downloading service will not work with Apple’s popular iPod mP3 device. In fact the high-street music and books retailer will stop selling iPods in its outlets sometime in 2005.

Instead, HMV’s music downloads will only be compatible with Microsoft’s Windows Media Audio which is compatible with over 75 portable players.

Some analysts are cautious on HMV’s move since iPod corners around 70% of the market for mobile.

Apple is Microsoft’s main rival and dominates the digital download market.

HMV is however undeterred and plans to invest around GBP10 million ($19 million) to develop the Internet service which it will launch in the second half of 2005.

HMV says the estimated cost per song download will be competitive with other online music providers.

Apple’s iTunes Music Store charges 79 pence ($1.52) per song. MSN charges 69 pence ($1.32). Apple’s international pricing however has been recently criticized.

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HMV’s service will include a custom jukebox software and hardware, similar to Apple’s iTunes, which it will distribute from its 200 UK stores. Microsoft will develop the software system for HMV.

The new service is likely to impact HMV’s existing subscription music service which is run through its website. The service lets customers download up to 50 songs for around GBP4.98 ($9.57) per month. HMV runs a similar non-UK site through

Shares of HMV were rocking on the news, up 4% to GBP2.54 ($4.89) which is just below its all-time high.

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