Microsoft to make music with HMV

MICROSOFT's bid to get into the music downloading market saw it sign a new deal with retail group HMV today. An agreement between the companies will see HMV roll out a new downloading service.

But although the music downloads from HMV will be compatible with Windows Media Audio and therefore more than 75 portable players on the market, they won't be compatible with best-selling iPod from Apple, Microsoft's arch-rival. Apple's iPod accounts for nearly 50% of the digital music player market.

HMV has teamed up with Microsoft to develop software and hardware enabling music lovers to download their favourite songs direct to their computers. The company will invest about £10m to get the service ready for its launch in the second half of next year.

But HMV remained tight-lipped on the price that consumers would have to pay for each song, or how many tracks would be available, compared with the stock in its 200 stores. These details will only be announced once deals have been agreed between HMV and the music companies in the new year, a company spokesman said.

HMV, which also owns the Waterstone's chain of bookshops, said its music downloads would be compatible with Windows Media Audio and therefore more than 75 portable players on the market. But they would not be compatible with the bestselling iPod from computer giant Apple, which is estimated to account for nearly 50% of the digital music player market.

HMV chief executive Alan Giles said: 'We have a unique opportunity to leverage the HMV brand, customer base and our store network to establish a strong position in the newly-emerging market for paid-for music downloads.'

Music publishers and stores are increasingly embracing digital technology to counter the threat posed by illegal peer-to-peer file sharers to their sales. Last month, entertainment group EMI reported 'explosive growth' in demand for digital music with sales of downloaded songs surging six-fold over summer.

Demand for songs downloaded via computer has surged since Apple launched its iTunes music store in the UK, France and Germany in June. Microsoft muscled into the market in October with its rival online store, MSN Music, which enables fans to download songs direct to their mobile phones as well as their PCs.

Microsoft director Alistair Baker said today: 'It's great to be involved in such a leading-edge retail project that will support an explosion of choice enabling music fans to buy music in-store and online.'