HMV group chief executive Alan Giles admitted the company had been slow to embrace digital downloads. "We don't expect iPod to retain the market share it has today for very much longer while it remains incompatible with the rest of the market," Mr Taylor said. Although Apple dominates the market, its share has fallen from 80% to 64% in the last year. HMV is confident it will overtake Apple and Napster in digital music. "Our digital competitors would kill for this head start." "A ready-made customer base is something that can't be bought," HMV e-commerce director John Taylor said. Its 208 stores attracted 172m customers last year, its website gets 2.8m hits a month and it has an email database of 600,000 customers. HMV plans to exploit its strong music retailing brand to fuel take-up of its digital service. Online music sales are predicted to nearly double from £34m this year to £65m next, reaching £261m by 2010. Legal digital sales account for less than 2% of the British market. About 5% of the UK population own a digital music player at present. HMV and Microsoft expect their new service to accelerate the adoption of digital music downloads. But HMV indicated it could sell certain tracks for as little as 39p in the future, should record companies choose to cut prices as a way of breaking new acts. The majority of HMV Digital songs will cost 79p to download, in line with iTunes and Napster tracks.
Instead HMV will sell Creative and iRiver-branded digital players, which use Microsoft software, priced between £69 and £229. However, iPod owners will have to buy a new digital player if they want to listen to the HMV Digital tracks on the move as the service is not compatible with Apple technology.
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