Buy.com to open digital music mart

The move, first reported in the San Jose Mercury News on Tuesday, marks the start of what is likely to be several moves by large e-commerce companies into the digital music market.

The service is being well-received by record industry insiders, who said Buy.com, a discount e-commerce Web site, is aiming to become "iTunes for Windows."

A Buy.com spokeswoman declined to comment on the impending release, but she said the company was planning a major announcement on July 22.

A flood of iTunes clones has been expected since April, when Apple Computer launched what was widely seen as the most attractive pay-per-song music download service yet to hit the Internet. Observers have been impressed by its ease of use and by the fast sales it generated--five million songs in its first eight weeks of operation. Rival music companies quickly intensified discussions with music labels seeking rights to offer similar services.

By launching the service quickly, even in the midst of a summer season when many computer users are on vacation, Buy.com may be able to get the jump on rivals. That includes Apple, which has said it won't release a Windows version of iTunes until the end of 2003 at the earliest. People familiar with the service said Buy.com has been able to use some technology previously built in-house, speeding its time to market.

Any music store moving into the Windows world will have a steeper hill to climb than iTunes had with Macintosh, however. Apple had the advantage of controlling the delivery technology all the way down to the iPod, the only portable music device that works with songs purchased from the company's online music store.

That made the job of integrating delivery, music format and anti-piracy encryption with hardware and software easier than in the Windows environment, where different brands of MP3 players and digital audio devices support varying music formats and digital rights management technologies.

Analysts said Buy.com is likely to pursue a broadly similar strategy to Apple's, offering cheap and easy music downloads in hopes of selling other goods with higher profit margins. In Apple's case, analysts said selling more iPod music players was an indirect goal for the music store. Similarly, Buy.com is likely attempting to lure visitors to its Web site, where they might also buy anything from computers to backpacks.

"For them, music would be kind of a loss leader," Jupiter Research analyst Lee Black said. "The download space isn't really profitable on its own, but it makes sense in conjunction with other things you do."