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Tuesday, August 09, 2011, 05:40 pm PT (08:40 pm ET)

Walmart to shutter MP3 store after failing to catch Apple's iTunes

Retail giant Walmart revealed on Tuesday that it will close its MP3 store later this month, even as Apple's iTunes continues to dominate the digital music industry.

The company declined to provide further details regarding the move, saying only that it was a "business decision," as noted by the Associated Press. Walmart will close the store on August 29, though customers who have already purchased music through the site will still be able to access their music there.

The world's largest retailer opened its MP3 store in 2003 in direct competition with Apple's iTunes. The digital storefront failed to gain much traction, however, with music sales on iTunes eventually passing Walmart's combined physical and digital sales in 2008. Apple held 26.7 percent of all music sales by 2009, more than double Walmart's 12.54 percent share.

As of late last year, Apple continued to dominate the digital music market with a 66 percent share, while second-place Amazon had climbed to 13.3 percent. Walmart's share stood at less than one percent.

Walmart MP3 store


NPD analyst Marshall Cohen characterized the retail industry as being in flux, noting that Walmart may be better off focusing on what it does best, rather than continuing to deliver a sub-par experience to consumers.

"It is very easy to become antiquated very quickly in the entertainment industry," he said. "If you are losing ground, and they probably were losing ground more rapidly year after year, it's probably better to regroup and retool."

Walmart's failure with its digital music store has been partially attributed to its choice of format. The company bet on Windows Media Audio, but eventually found itself competing with Microsoft's own Zune Marketplace while being blocked from Apple's iPod.