Service to launch Sept. 5 with 1.3M titles.

HMV U.K.'s new digital music service will embrace the independent label sector and adopt a flexible pricing structure, executives at the market-leading retailer told reporters today (Sept. 1).

HMV will press the button this coming Monday (Sept. 5) on its bespoke HMV Digital player, which has been in the works since January and has cost £10 million ($18 million) to develop in partnership with Microsoft and digital service provider MusicNet. Playing on HMV's "Top Dog For Music" slogan, the retailer's digital ambitions will fall under the moniker "Now We're Top Dog For Music Downloads Too." An initial marketing budget of £1 million ($1.8 million) has been allocated.

At launch, the online store will offer roughly 1.3 million titles licensed from the four majors and several hundred independent labels. Managers of the project say they will expand its catalog on a monthly basis.

The retailer's head of digital Mark Bennett says the operation is also committed to making available deleted albums.

The majority of individual downloads will be priced at £0.79 ($1.42), rising to £7.99 ($14.39) for entire albums. However, HMV executives say some titles will be cheaper, while "premium" content may rise above the £0.79 which is emerging as an industry standard. All downloads will be based on the Windows Media Audio format. A subscription offering -- HMV Unlimited -- will cost £14.99 ($27) per month. Users can also rip physical CDs and play back tracks on the service's jukebox function, or burn tracks onto CD-Rs.

HMV said it will stock only compatible music players and Apple Computer's iPod in its 200-plus stores nationwide.

Speaking at the media gathering at London's Bafta, HMV U.K. & Ireland managing director Steve Knott said the company's objective was for the operation to be the "best digital service in the United Kingdom." Knott explained that HMV had deliberated on stepping-up its digital presence until it was confident it would "deliver a quality service worthy of the HMV brand." No comment was made on HMV Digital targets.

HMV E-commerce director John Taylor said the company's rapport with the indie label community paved the way for a superior catalog. "Working with indies shall give us a major advantage over our competitor," he said. Apple Computer's iTunes Music Store controversially launched in Britain last summer almost entirely devoid of indie content.

Staff in HMV's outlets will distribute free CD-Roms which contain the software needed to launch the player on PCs. Alternatively, the player can be downloaded at HMV's U.K. Web domain.

HMV's chief rival Virgin will tomorrow announce details of its own digital music ambitions. Knott welcomed the move. "Competition is healthy. It's good for the development of the whole medium," he said. "We will compete with them as we have done on the High Street."

HMV grabbed a 24.7% share of the U.K. singles market last year, compared with Virgin's 22.5% stake, according to figures collated by charts compiler Millward Brown for the TNS Audio Visual Trak survey. During the same period, HMV had a 22.6% share of the albums market to Virgin's 10.2%.