Sainsbury’s is aiming to secure a share of the already crowded online entertainment market by launching a music-only download service.
The retailer is making 2.3 million tracks available to download, with prices starting at 89p for a single track and chart albums costing from £6.99. It will also offer a deal of the week with albums for £4.99.
Sainsbury’s head of entertainment online Mark Bennett hinted that film, ebooks and games content could be on the way when he told Marketing Week: “Music downloads are the first step in the expansion to offer digital entertainment along with our existing range of DVDs, CDs, games and books.”
Commenting on the new venture, Craig Armer, consumer research manager at Kantar Worldpanel’s entertainment division, says: “Physical is still the majority of spend in music, but if you don’t have a presence in digital then you’re going to lose out so it’s a good idea for Sainsbury’s to be getting into this space.
“If Sainsbury’s can carry on with film and games content it could be the first all-encompassing entertainment business because HMV is not quite there yet. People have beat HMV to it although it has got the right brand values and associations.”
Where Sainsbury’s can attempt to set itself apart is through the cross-promotional opportunities offered by its Nectar loyalty programme. Customers can earn Nectar points when they download MP3s via Sainsbury’s, which Ovum telecoms analyst Mark Little says is the “essential currency” for making the cross-promotional model work and will encourage more users to log on.
Little adds: “I don’t believe retailers are expecting to acquire such music credibility either. Retailers are more interested in the potential synergies of the close cross-promotion of music downloads and groceries than taking a bite out of Apple.”
Tesco launched a download service two years ago and currently offers digital movie streaming thanks to it having a stake in BlinkBox. However, Armer at Kantar Worldpanel says that its declining share of the market is not “significant”.
Dixons moved into movie streaming earlier this year with the launch of Knowhow Movies. It is likely to broaden its offer to include music and games, while HMV is also developing its digital platforms to enable it to offer digital music and film content.
Viewpoint: Rosie Baker
Apple iTunes is unlikely to loose any sleep over Sainsbury’s entry into the digital music market but that’s not to say the supermarket can’t make its online entertainment division a viable arm of its business.
Music downloads account for about 10% of the total entertainment market. However, a third of all music sales are digital, according to Kantar Worldpanel, which means that the potential for growth is huge.
The fact that Sainsbury’s isn’t a music specialist shouldn’t prevent the service from being a success because not every customer migrating from physical CDs to MP3s needs to buy from a music specialist.
As sales channels become more connected, it makes perfect sense for any retailer that sells technology and digital devices to be looking at the opportunities of selling digital content.
As more brands move into this space, what Sainsbury’s must be clear on is its marketing of the service and what makes it different from rivals.