Hmv, Virgin To Relaunch U.k. Download Services

Rival British retailers HMV and Virgin will mark their turf in the digital space next month.

Both heavyweights plan to relaunch their music download services, but in an increasingly crowded online marketplace, will it make any difference?

Mark Mulligan, U.K.-based senior analyst/research director at Jupiter Research, thinks so. "There's a very strong realm for traditional retailers in that they've got strong brand affinity with customers, strong retailing and programming expertise," he says.

He calls the two retailers' plans to lure customers online "very carefully timed. There's no point getting into the market too early."

Richard Branson's London-based music and entertainment specialty division Virgin Retail plans to relaunch its download service Sept. 2, just three days before HMV does the same.

Britain's download business—the most advanced in Europe—has begun to bear fruit in the past 12 months. Trade association the British Phonographic Industry recently published figures indicating that more than 10 million legitimate downloads were purchased by Britons in the first half of the year.

In 2004, with Apple Computer's dominant iTunes Music Store opening for business, the United Kingdom saw 5.7 million downloads sold. "It's way too early to be talking about this market being either saturated or mature. It's at a very early stage," Mulligan says.

HMV and Virgin are the power players in Britain's music retail market. HMV grabbed a 24.7% share of the singles market last year, compared with Virgin's 22.5% stake, according to figures collated by charts compiler Millward Brown for the TNS Audio Visual Trak survey. During the same period, HMV had a 22.6% share of the albums market to Virgin's 10.2%.

The BPI welcomes the online push. "The combination of well-known brand names and what are expected to be significant marketing campaigns will further drive growth in a U.K. download market which is already growing at a phenomenal rate," a BPI spokesman says.

One industry source notes that the relaunched services focus on selling music, rather than on driving sales of digital music players—a core strand in Apple's online music strategy.

HMV and Virgin already have online services in place, but the September relaunches represent the retailers' intentions to "get serious" in the digital space.

"At the end of the day, it doesn't really matter who launches first, as digital customers will ultimately only care about who has the best, easy-to-use service and the greatest range of recordings," HMV head of digital Mark Bennett says.

Virgin Megastores U.K. marketing director Steven Kincaid says his company's strong brand and heritage in retailing will underpin its goal to "become the ultimate download destination."

Across the English Channel, France's Virgin Mega and Fnac have already translated their retail brands into online real estate. The International Federation of the Phonographic Industry pointed to their online affiliates in its 2005 Digital Music Report as pillars of France's nascent download market.

Virgin and HMV will regroup their online ambitions under the brands Virgin Digital and HMV Digital, respectively. Both sites will be powered by MusicNet. The chains plan to leverage their brands with recordings of live in-store performances that will be available for purchase through their respective download stores. Neither company has announced pricing details. ••••