Virgin Megastore is to go up against Amazon.com and CD.Now, selling music CDs over the Internet.
Announcing a #50 million investment in the Internet last week, Virgin founder Richard Branson alluded to an imminent foray into selling CDs online, initially fulfilled from the US.
"It is the way forward," he said.
Branson is known to be keen to get into the business of selling music online. "After all it is his roots," said one source.
The Virgin Megastore, however, is staying quiet: "We know that Richard Branson mentioned it in passing, but we do not want to make any comment on it at this moment in time," a spokesperson said.
Virgin Megastore in France has a website, but does not sell online yet. Virgin Megastore France declined to comment.
Amazon.com and CD.Now are industry leaders by some distance, selling music over the Internet in the US. Both use the same distributor, Valley, in California. Amazon is rumoured to be talking to a heavyweight record company with a view to distributing direct.
Analysts believe that Virgin will have a tough time cracking the online music market and will have to be prepared to put serious investment behind it.
"Virgin Megastore is in major metropolitan areas only in the US, so the brand name will not help it that much," explained Mark Hardie, an analyst with Forrester Research. "It will be difficult to lock into deals or communities with big players such as Yahoo or AOL as Amazon and CD.Now and the like already have them locked into two or three year deals."
"Virgin would have to be prepared to spend $25 million to $50 million maintaining a presence in this kind of market," added Hardie.
This was backed up by Adam Daum, an analyst for market research company Inteco.
"The #50 million budget allocated is not that huge, but CDs are an obvious route to go to get a commodity product up and running in sales on the Internet," said Daub. "It is undoubtedly being used to establish and extend the Virgin brand in the US, although Virgin Atlantic is probably better known there than Virgin Megastores.
A spokesperson for Amazon said "We don't comment on competitors and we are focusing on our customers." CD.Now was unavailable for comment.
Electronics and computer chain the latest high street retailer to fall into difficulties
Incisive Media and Investec Asset Management supported fundraiser crosses Atlantic in 40 days
Alphabet's health sciences division Verily have been messing with AI algorithms
North Korea's cyber attack capabilities are expanding fast - and turning their fire on a wider range of targets