As the old chestnut has it, imitation is the sincerest form of flattery. But in the high-stakes and fast-moving world of digital music sales, compliments like that can kill. In the U.S., we've long heard about plans from Wal-Mart (NYSE: WMT ) , Sony (NYSE: SNE ) , and others to elbow their way into Apple's (Nasdaq: AAPL ) growing music market.
Today, a couple of powerhouses in the European download wars fired a pair of preemptive PR volleys, trying to take back a bit of the press that Jobs and Co. are hoping to monopolize with a European launch for iTunes.
Roxio's (Nasdaq: ROXI ) Napster today announced a partnership with NTL, the U.K.'s leading broadband provider. The firm launched its download service in the U.K. last month to little fanfare, at least compared to what Apple can manage. Doing so put it in direct competition with On Demand Distribution (OD2), a sort of digital music "wholesaler" that is the No. 1 European download provider, through its work for front-ends like Coca-Cola's (NYSE: KO ) mycokemusic.com, Microsoft's (Nasdaq: MSFT ) MSN France, NEC's (Nasdaq: NIPNY ) Packard Bell, and other affiliate sites in Germany, Spain, Italy, Austria, Belgium, and The Netherlands.
A bit of a price war ensued, and today, OD2 also turned up the heat in anticipation of iTunes' arrival, announcing its SonicSelector service, which will allow Web users to stream music for as little as 1 pence (U.K.) per song via a plug-in for Windows Media Player 9. Songs can also be downloaded the more traditional way for 0.5 euros per track.
What all this means for investors is tough to gauge. So far, Apple's been the only one to profit from digital music with any consistency, though the iPod does much better than iTunes. Roxio's prospects look mixed, and behemoths like Microsoft and Wal-Mart can afford to screw things up. With a winning formula for service and hype, this is Apple's game to lose, but given Cupertino's sketchy computer sales, the firm depends heavily on the digital music biz, where anything can happen. Priced at 65 times trailing earnings and 48 times this year's estimates, shares look too rich for reality.
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