Walmart to Exit MP3 Business on August 29

iTunes wins another one. Walmart will shutter its online music store late this month and exit the MP3 business. While no public announcement has been made, the company confirmed the move to several news outlets on Wednesday.

Walmart has begun to alert its partners, saying the store will be disabled by the end of the day on August 29. The company still plans to support customers who purchased music for the foreseeable future, however.

Why did Walmart fail? Weak sales likely did the MP3 store in, as well as the lack of tight integration with a music player a la the iPod and iTunes. Add to this that the portion of the market not controlled by iTunes is getting quite crowded, and it's obvious why Walmart couldn't dominate the digital music business.

Walmart's MP3 store debuted in December 2003, although it officially launchd in March of the following year. It attempted to undercut iTunes by offering songs at 88 cents, but tracks were only available in Microsoft's DRM-protected WMA format, making the store unusable for iPod owners.

As players based on Microsoft's audio format never quite took hold, Walmart was forced to negotiate with the labels to offer MP3 files to stay competitive. DRM-free tracks first became available in 2007, but that did little to help its cause.

The last nail in the coffin was likely Amazon's music store, which also launched in 2007. For whatever reason, the e-retailer's offering caught on with many consumers, and early in 2008 it passed Walmart to become the second biggest online music store.

While it is never good to see companies fail in a market that is so heavily dominated by one company like digital media, it is certainly not surprising. Apple's dominance has been built on integration, something that none of these other competitors, save the Zune, have ever been able to provide.

It will be interesting to watch now if other players begin to give up on digital media. Perhaps some are looking at other sectors of the market -- such as streaming -- which are quickly becoming the next big thing. At least Apple doesn't have a fish to fry there (yet).

For more tech news and commentary, follow Ed on Twitter at @edoswald and on Facebook as well as Today @ PCWorld.

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