Wal Mart wades into digital music

Wal Mart to test digital music this is the really big news of this week. The Real story is a footnote. I have contended for a long time that you will buy digital music and other content from retailers you already have a relationship with. No new music retailer will come out of this. Look for Amazon to be in the business soon. Digital media will be a loss leader for these people because everyone will be paying the same royaties to the music labels leaving little room for differentiation. The differentiation will be in retailer soft bundles with music playing devices and other things that have more margin. Wal Mart will be restricted somewhat in that they are only offering WMA format songs and that format is not as widely supported as MP3. But Apple iTunes already has that problem as well and seems to have enough players to make a business. Where you want to be in a war like this is as the arms supplier. That is Loudeye.