Apple’s iTunes music store faced a new challenger yesterday as Amazon introduced a rival online MP3 service with knockdown prices.

Amazon MP3, which has three million tracks, initially will sell chart albums such as Take That’s The Circus and Kings of Leon’s Only by the Night for as little as £3. A wide range of singles will be available for the promotional price of 59p each, compared with the 79p charged by iTunes.

Unlike Apple’s offering, which limits the devices that tracks can be played on and the number of copies that can be made, Amazon has struck a deal with the four big record labels to offer customers music that is “DRM-free”, with no restrictions under “digital rights management”.

Julian Monaghan, head of music at Amazon, said: “There are a large number of consumers who aren’t in the digital market yet. We want to make it as easy as possible. We now have digital, vinyl and CDs, so consumers only need to come to one place.

“We know that there will be a lot of people given MP3 players for Christmas and the site will experience a lot of traffic.”

Mr Monaghan would not comment on how long Amazon would undercut Apple’s prices, but said that the site would focus on adding hundreds of thousands, if not millions more tracks. “We want to offer the widest range of products and we will be adding tens of thousands each day,” he said.

“It’s really competitively priced. There are albums on there that you wouldn’t be able to buy elsewhere at that price.” Music companies reacted favourably. Ged Doherty, chairman and chief executive of Sony BMG Music Entertainment UK, said: “Amazon’s music services in the US have attracted new digital music consumers and helped grow the digital market.

We’ve high hopes it will have the same impact in the UK. Amazon is an excellent and well-trusted retailer, and this new store can only be good for UK music.”

Rivals said that Amazon offered inferior sound quality to cut download times and data-transfer costs. Ben Drury, chief executive of 7digital.com, the first online retailer in Europe to offer DRM-free MP3s from all the main labels, said: “Our sole aim is to provide consumers with a first-rate music delivery service because that’s what we are and what we know. Their MP3 downloads are only 256kps quality so they are not delivering the high-quality 320kps MP3s, unlike 7digital.com.”

But he added: “It’s great that general retailers like Amazon clearly recognise the importance of digital music for consumers and the MP3 universal music format which works on all devices. Amazon’s entry into the market is good news for the digital music consumer and will accelerate the migration from physical format to digital. This is another . . . blow for iTunes.”

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