AMAZON is set to challenge Apple’s iTunes music store with the launch of its own digital music download service. The online retailer is in advanced talks with record companies about the initiative.

Plans under discussion include Amazon-branded portable music players, specially designed for the retailer. Customers would sign up to a monthly subscription service offering discounted songs to be downloaded on to the players.

But if Amazon links up with a rival technology firm to Apple, the computer company may withdraw its iPods from sale through the website — where they are among the most popular electronics purchases.

Sources suggested Amazon could pick Samsung, the South Korean technology group, as a partner. The players could be sold cheaply or with a year-long subscription to the service. Users would have access to unlimited music as long as they maintained their subscription.

Record companies are keen for Amazon to enter the download business and offer competition to iTunes, which enjoys 70 per cent of the online music market in the US and Britain.

With 55 million customer accounts and strong sales of music CDs, Amazon is an attractive outlet for music companies wanting to sell tracks at a variety of prices rather than the fixed 79p iTunes fee. The company is the world’s leading online retailer but relied on physical CDs, DVDs and books for 70 per cent of its 2005 sales and must meet customers’ increasing digital requirements.

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