updated 06:15 pm EDT, Tue August 9, 2011
Walmart to shutter MP3 store by August 29
Walmart said Tuesday that it would close its MP3 store on August 29. The discount retailer said it had made a "business decision" to get out of MP3 downloads and would wind down in just under three weeks. No reason was given for the closure.
The chain was one of the earliest major outlets to get into pay-per-track music downloads after Apple, launching in fall 2003, but never gained significant traction. It had counted on its razor-thin margins on tracks as its main advantage and frequently sold songs for 88 cents versus Apple's 99 cents. Even when RIAA labels insisted on variable pricing for unprotected tracks, it still discounted tracks by about five cents each and had similar deals on full-size albums.
Much of Walmart's failure has been blamed on its choice of formats. Making the presumption that endorsing Microsoft's choice of format would lead it to success, it opted for Windows Media Audio and found itself locked out of Apple's iPod, guaranteeing a lack of mainstream adoption. The choice of a Microsoft alliance compounded the troubles further when Microsoft launched the Zune and its companion Zune Marketplace, leaving Walmart to compete against its own partner.
At the time, Walmart was one of the very largest sources of music in the US and was hoping its size as a retailer would give it an edge. Apple eventually passed it to claim the largest US music store, regardless of format, and has only been widening its lead. Purely in digital, Walmart owns just a small fraction of the market as it bows out, while Apple has over two thirds and Amazon MP3 about a sixth.