Wal-Mart is said to have plans to launch a pay-per-song download service by the end of the year.

According to Bloomberg, Wal-Mart has been in talks with record companies to license music for its own iTunes-style download service.

Wal-Mart, the world's largest retailer, currently controls 14 per cent of worldwide music sales. The company is said to be seeking a foothold in online music, as downloading, legal or otherwise, cuts CD sales.

According to the International Federation of the Phonographic Industry, global music sales fell 11 per cent to $12.7 billion in the first half of this year after declining 7 per cent last year and 6 per cent in 2001.

Market-research firm NPD's vice president Russ Crupnick said: "Having an alternative makes an awful lot of sense for these retailers who are already losing sales to illegal downloading and facing competition from digital services."

David Card, an analyst at Jupiter Research, predicts: "The market for legally downloaded music will be $35 million this year, a fraction of the $12 billion in annual music sales. I estimate online music sales will rise to more than $100 million next year and approach $700 million by 2008".

Dan Hess, vice president of ComScore Networks, which tracks Internet sites, said: "It's clear, based on the amount of activity, that the level of consumer interest and response has been significant' to downloads. Any retailer that depends upon movies and music has to at least evaluate its options."