HMV will roll out its digital service at the end of July as the U.K. entertainment retailer makes a concerted attempt to grab market share in music downloads.

The site is currently in beta. It is selling the new MIA album for £7.99 ($12.34) and Kylie Minogue's single "All the Lovers" for 99p ($1.53).

HMV has not publicized the beta service. But the news about the launch of its digital store in the U.K. was announced to the audience at its suppliers' conference in London today (July 15).

The event at the HMV Forum in north London featured presentations by executives including chief executive Simon Fox, new commercial director Steve Napleton and his team, and marketing director Graham Sim.

"We are a business that's changing," said Fox, noting in particular the acquisition of its live venue, promoter and artist management partner Mama Group in January 2010. Sim described HMV as an "entertainment superbrand" active in physical retail, digital, live and mobile.

Challenge To iTunes

HMV head of music Melanie Armstrong said her team was most excited about the forthcoming launch of HMV Digital. "We are very close to launching HMV Digital," she confirmed. The download service has been developed in partnership with digital entertainment company 7digital, in which HMV is a joint venture partner.

Crucially, Armstrong said its download manager will work with iTunes or Windows Media. "It's going to be great," said Armstrong, adding that with the support of labels "we can give iTunes a run for their money."

HMV has previously operated a digital music service but struggled to win over customers with its DRM-enabled offering that was tied to Windows Media devices and would not work with iPods. It did not move into DRM-free in 2007 but by then iTunes was dominant. HMV shut down its service earlier this year in order to create a new download store.

Sarah Hughes, head of online, described the digital service as having a "very strong, intuitive customer experience."

"It's an agnostic service, you can use the music on any MP3 player," she added, confirming it would officially launch at the end of July.

Live Events Drive Pre-Orders

Given HMV's presence in the live sector with 11 U.K. venues, including the Birmingham HMV Institute that opens in September, it was made clear to suppliers that special events at its venues can drive pre-orders.

Fans who pre-ordered U.K. pop act Take That's live DVD "The Circus Live" for mail order from were entered into a draw to attend the premier at the HMV Apollo in London. That resulted in the "best ever pre-order for a DVD" at HMV, said Armstrong.

She added that HMV had also worked with label partners on exclusive gigs at its venues by La Roux and Take That, as well as exclusive editions of albums by JLS, Kylie Minogue and the Rolling Stones. Throughout the afternoon, HMV executives made the point that their attention to detail for music releases with added value from exclusive bonus elements could drive sales, rather than relying on rock bottom prices like mass merchants.

Although Armstrong said HMV does well in week one of release, "now we need to be as strong before release" by driving pre-orders online.

"We can tap into fanbases like nobody else," she added. "A one-dimensional retailer can't do all of this."

HMV venues sell music and are now chart eligible and Armstrong told the audience that "you shouldn't underestimate the sales we can drive at venues the size [capacity of 5,000] of HMV Apollo."

She added that there are plans for HMV stores to improve the catalog range but stressed that it wanted a "credible range in store" and warned that "customers won't pay £16 [$24.72] for a CD any more."

Pure HMV Card

As well as its customer data from recorded music sales online and its ticketing arm for its venues, the retailer's Pure HMV customer loyalty card was presented as a key method of engaging with its customers. The retailer snags exclusives from its entertainment partners, including tickets to premieres, signed products and even a guitar that belonged to Dave Grohl, and allows members to exchange loyalty points for the various rewards on offer on the website.

There are now more than 1 million Pure HMV cardholders, according to HMV. Sim said Pure was becoming "the most valuable entertainment database in the U.K."

Napleton added that the loyalty scheme is "transformative in our business in putting our customers at the heart of everything," while providing valuable insight into those customers.

Hughes added that HMV is engaging with customers via social networks with media content from its in-store performances in 2010 and throughout the retailer's history, as well as movie trailers.

Live Expansion

Gary Warren, managing director of content and talent at Mama Group, said HMV's live arm was looking at "opening new venues and acquiring new festivals." Mama's Lovebox festival takes place in London this weekend (July 16-18) and it also operates new classic rock festival High Voltage and Global Gathering.

Warren revealed that Mama's promoter arm Mean Fiddler Presents will handle U.K. art-rock veterans Roxy Music's U.K. arena tour in early 2011.

He also tipped new acts Violens and Perfume Genius, which are on Mama's management company SuperVision's roster. And he reminded the audience that Mama venues were available for product launches, showcases, rehearsals and premieres.

Napleton added that HMV's expansion into fashion would roll out in the autumn, with the dedicated 'Studio' space in stores building on its range artist T-shirts.