W-M and McD’s in Separate Online Music Deals

Discussion
Nov 06, 2003
George Anderson

By George Anderson


It’s a fairly common sight to see a McDonald’s inside a Wal-Mart store. Despite this close proximity, the two companies may soon be competing with one another in the online music
arena.


According to two separate reports in the New York Post, Wal-Mart is planning to launch it’s own downloadable music service on www.walmart.com,
while McDonald’s is expected to make an announcement on a promotional deal with Apple to give away one-billion songs from the iTunes Music Store site.


The Post report said Wal-Mart, which is said to represent 20 percent of American music sales, is finalizing deals with five major music companies to launch its service before
the Thanksgiving holiday shopping weekend.


The McDonald’s deal with Apple is reportedly going to be even larger than the one announced last month with Pepsi. Details of the promotion are not known, but McDonald’s will
reportedly pay Apple its regular fee of 99 cents for each song downloaded.


Moderator’s Comment: What will Wal-Mart’s entry into the online downloadable music business mean? Will McDonald’s deal with Apple put a strain on its
relationship with Wal-Mart?


Our first thoughts were 93 cents a song and say goodbye to packaged CDs and hello to a surge in blank CD sales.


Wal-Mart will undoubtedly attempt to capture share market the Wal-Mart way by lowering the price of goods. It’s the strategy that helped it capture 20 percent
of the current store-bought music business.


Wal-Mart’s entry into the business combined with the incredible success of Apple’s service makes clear that legal downloads of music are here to stay (at
least until something better comes along).
[George
Anderson – Moderator
]

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