Record stores head-to-head in download war

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Two of Britain's biggest record stores are poised to go head to head in the battle for digital music sales by launching their own internet download services.

HMV and Virgin will unveil details of their new services later this week in a rivalry that could change the way the British public buys music.

At present, digital downloads account for just 2 per cent of all music sales in the UK, but following the success of sites such as iTunes and Napster, the major high street retailers have realised they can no longer afford to rely on album sales alone.

In an attempt to offer exclusive content, HMV has lined up a host of up-and-coming bands, kicking off with a Razorlight gig at London's Marquee Club, which will be recorded and made available over the internet.

In a line-up themed around this year's Mercury Music Prize, which takes place on 6 September, other artists who will perform next week at the retailer's flagship store on Oxford Street in London include the Mercury nominees KT Tunstall, The Go! Team, Seth Lakeman, Maximo Park and MIA. Goldie Lookin' Chain, Echo & the Bunnymen and Clor will also play.

Virgin are going to pip HMV to the post by launching on Friday, just ahead of its competitor's start date of 5 September.

Virgin Digital will offer more than a million tracks, which users will be able to sample before they buy, as well as internet radio.

The retailer is remaining coy about its pricing structure, but in the US, Virgin sells music over the internet at less than one dollar per track.

HMV, which is investing £10m in its service, hopes to differ from rivals by offering a flexible pricing structure. While customers will pay a premium for a track from a well-known artist, releases by newer bands will be cheaper.

Gennaro Castaldo, HMV's head of press, denied the music store was late in jumping on the music download bandwagon.

"It's the first time that major players in the UK are launching their own sites - iTunes was the initial catalyst, the fact that we are now launching is the next stage in taking music to the mainstream. The timing is just right," he said.

A potential problem with the service is that it will not be compatible with iPods. Mr Castaldo said: "That's a choice made by Apple and it's one that we regret. Although the iPod is iconic, from a functional point of view, alternative products are just as good.''

He added: "The iPod is a desirable device, but it is fashion-led and fashion tends to move on."