US online giant AOL is try and capitalise on the successful launch of Apple's iTunes service by selling music downloads from artists including Madonna and Radiohead to customers on a pay as you play basis.
Apple's service, launched in the US in April, has already notched up over 4 million downloads from customers paying 99 cents a time, and has convinced the major record labels that legal online services could take off after all.
Now AOL plans to follow its lead by launching its own music download service in the US, offering music fans the chance to download songs on a track by track basis for 99 cents and offering more flexibility in terms of what they can do with them.
"We come in with 15 million people and want to position ourselves as marketing partner to the music industry and position AOL as the best place for music online and offline," Bill Wilson, newly appointed general manager of AOL Entertainment, told Reuters.
"We are competing day to day with MTV and Rolling Stone, not just on the online front," he added.
An AOL spokesman today confirmed that the company was planning to launch its own download service later this year, capitalising on the success of a number of one off trials.
"We have experimented with with digital downloads and 99 cent singles on a trial basis so we're building on that and the success with music generally," added the spokesman.
Later this year, AOL will also move into competition with retail sites such as Amazon by selling physical CDs and DVDs through its website.
The move is part of AOL Time Warner's attempts to revive the fortunes of its troubled online division by increasing the number of paid for services and making better use of its movie and music assets.
The new service, initially only available to AOL subscribers, will offer a wide range of music from Warner artists such as Madonna as well as other major labels.
Other major online players, including MSN and Yahoo!, are keen to jump on the music download bandwagon as the major record labels begin to accept that the only way of competing with illegal peer to peer file swapping services, such as Kazaa and Grokster, is to beat them at their own game.
Apple itself plans to launch a European version of iTunes before the end of the year and will also shortly unveil a version for PC users. At present only Apple Macintosh users, about 5% of the total number of computer users, can access the service.
AOL said that the new launch wouldn't affect its involvement in subscription service MusicNet, which launched in late February and now has more than 75,000 subscribers
While generally accepted to have been more successful in luring customers away from illegal sites than the rival PressPlay service, which was set up by Sony and Vivendi Universal, it still has only a fraction of the users that continue to download free music.
Last month, PressPlay was sold to software company Roxio, which plans to rename it and use it as the basis of a relaunched Napster service.
At the height of its popularity in 2000, more than 80 million computer users were using Napster's huge library of free music.
It caused panic in the record industry, which was already suffering faltering sales as a result of traditional piracy and increased spending by consumers on other leisure products.
Napster originally closed in July 2001 after the major music labels won an injunction forcing the site to remove all copyrighted songs from its database.
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