Profits in the Digital Space Are Sparse

Profits in the digital space are "sparse," the chief executive of HMV said earlier this month, lamenting "widespread competition from the free illegal market". But the UK's leading entertainment retailer is today stepping up its digital offering, a joint venture with digital music company 7digital.

Today marks the full launch of HMV's music download service, hmvdigital. Boasting a catalogue of 10m songs, hmvdigital is being billed as a genuine rival for the Apple iTunes digital download crown.

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The current iteration of the hmvdigital.com has been in beta testing since March this year and was built by 7digital, the company HMV bought a 50% stake in last September. Early hmvdigital customers may be entitled to a limited number of free downloads, all top 40 chart singles are downloadable for an introductory price of 40p per track, and chart albums are retailing at a discounted price of £4.99.

The store will synchronise with iTunes, Windows Media Player and be compatible on PC and Mac computers. Many tracks are available at the highest-quality MP3 compression of 320kbps.

HMV Group announced profits of about 18% last year, a result of the brand finding revenue streams in live music, merchandise and fashion. As a backdrop to this, shares in the multiplatform retailer halved in price in the past 12 months, indicative of a market where CD sales slumped by 8.5% and the home entertainment market fell 10%.

Sarah Hughes, HMV's head of online and digital, said the website is "a world class download store that reflects both HMV's music retailing heritage and our strategy to be a broad-based entertainment brand.

"With so many innovative and wonderful features, it offers a truly intuitive and engaging customer experience that I very much hope will lead to HMV becoming a bigger player in the burgeoning digital market."

Digital downloads grew by 48% in 2009, according to research by analysis company Forrester, but download revenues were still just 21% of CD sales.

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