Walmart Moves Its Music Forward

In August, NPD Group released its Top 5 ranking of U.S. music retailers for the first half of 2008. Apple (AAPL) was number one and Amazon (AMZN) rising. In the related press coverage, Walmart (WMT), though a significant seller at number two, seemed almost a future footnote. The prevailing view was to write them off. Now, with Best Buy (BBY) trying to secure its digital footing via Napster, Walmart is making moves to regain ground (or at least maintain it) too.

Tuesday, Walmart updated its music store with a cleaner, more accessible layout. 3 million songs, compared to Apple’s near 8.5m, are offered (not all of Apple’s music is DRM-Free).

Following the high volume, lower price service model that Walmart is known for, they’ll compete with iTunes and Amazon on price. MP3s 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 74 cents 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.

Comments

[Timeline St...:]

Ya mean I can git my Toby Keith through that wire that come inna my computer? Well coat me in grits and deep fry me, ya just made Cooter a happy man!

All kidding aside, I doubt that this will do anything great for WalMart or the overall quality of music. That's just a hunch and I have no supporting information.

2008 Oct 30 06:31 AM

[brewer:]

A nickel a song savings, and I have to manually move them around since Wallmart has no software? Save a quarter for that hassle? No thanks.

I think WM is being used by labels to try to thwart iTunes. They could allow iTunes to sell with no DRM, but that would be what consumers want, so no...

2008 Oct 30 11:38 AM

[Murphy Mac:]

It's hard to believe this story could be written without mentioning Walmarts recent music business activity.

Walmart pulled the rug on its previous customers, telling them they were shutting down their DRM servers, making customer purchases useless unless they burnt them to cd. A process people who bought hundreds or thousands of songs wouldn't be excited about.

MS has played a similar game.

2008 Oct 31 08:20 AM

[Steven K:]

I agree with Murphy. Aside from its DRM controversy, Walmart has worked to virtually kill a once-vibrant market place for smaller artist. It has become such a power-house, a 600 pound gorilla in the music business, that record labels are taking fewer risks on unknown artists and are instead vying for the limited shelf space in Walmart’s tiny offering. No wonder so many artists are going to independent labels

2008 Oct 31 05:09 PM

[brewer:]

Independent artists should go direct to iTunes with tunecore. It's easy and cheap, and the artist keeps almost all of it.

Sent from my iPod touch.

2008 Oct 31 08:33 PM