WAL-MART HAMMERS APPLE’S ITUNES

Wal-Mart is lowering the bar in an escalating pricing battle in digital music.

The retail giant unwrapped an updated version of its digital music store at walmart.com yesterday, offering its most popular tracks for 74 cents each – 25 percent cheaper than market leader Apple iTunes.

Wal-Mart – one of the biggest sellers of CDs in the US – is no stranger to deep discounting in music.

For years, the retailer sought to make inroads in the digital-song market by aggressively pricing music downloads below iTunes’ standard 99-cent rate. Music protected with digital-rights management software sells for an industry low 88 cents per song.

But the company has so far failed to break Apple boss Steve Jobs’ dominance in the market because the song format Wal-Mart used wasn’t compatible with the iPod.

Wal-Mart began transitioning its music catalog to the iPod-friendly MP3 format at 94 cents per track in August 2007 – which at the time was a new low for MP3s. But it is only now that the retailer is fully coming up to speed on the MP3 effort with a full catalog and a redesigned Web site.

In the meantime, a growing number of other rivals have entered the market, offering digital songs at prices below what iTunes offers.

Amazon sells hit songs in the MP3 format for as low as 89 cents each. And last week, digital music destination lala.com unveiled a song-streaming service that offers online-only ownership of tunes for 10 cents apiece and many albums for under $1.

Wal-Mart hopes to build share by driving greater synergies with its physical music business.

The company said that starting in mid-November it will offer consumers a free MP3 of their choice with every CD bought in a Wal-Mart store or online.