After eight years of quietly selling music downloads, Wal-Mart (NYS: WMT) is calling it quits. The world's largest retailer has advised distribution and licensing partners that it will close its MP3 store on Aug. 28, according to Digital Music News.

This is a surprising move on many different levels.

  • Wal-Mart recently integrated its Vudu video-streaming service with walmart.com, so it would seem odd that it's throwing more promotional muscle behind one form of a la carte streaming while nixing another.
  • Amazon.com (NAS: AMZN) has been successfully creative with its music streams. Whether it's selling Lady Gaga's new CD as a download for just $0.99 or using digital purchases to expand its fledgling cloud-based streaming platform, Amazon is proving that you can stand out in a world where Apple's (NAS: AAPL) iTunes rules.
  • Best Buy (NYS: BBY) has had a few rough quarters, yet it continues to sell online tracks. Does Wal-Mart really want to let Best Buy be the only bricks-and-mortar chain directly selling digital downloads?
  • Amazon is now selling movies, music, books, and software online. If Wal-Mart truly wants to compete with Amazon, it can't afford to fall behind.
  • Digital music is apparently popular, judging by the initial excitement over Pandora Media's (NYS: P) IPO and Spotify's stateside launch.

Wal-Mart's MP3 page is still not advising shoppers of its pending closure, so there may be time for the discounter to change its mind.

Wal-Mart tried to set itself apart from Apple and Amazon by selling music at a slight discount to the larger e-tailers. Offering songs at $0.64, $0.94, and $1.24 price points should have been a draw to young penny-pinching listeners. However, whether it's that the Wal-Mart brand just wasn't cool enough for music tracks or that folks are just more glued to the iTunes interface than they would care to admit, the department-store chain just wasn't able to compete on price alone.

Music fans are finicky. No surprise there. Wal-Mart hangs it up just as the digital-music scene is getting good? Now that is a big surprise.

Where do you buy your digital music -- if you even buy digital music? Share your thoughts in the comments box below.

At the time this article was published The Motley Fool owns shares of Best Buy, Wal-Mart Stores, and Apple. Motley Fool newsletter services have recommended buying shares of Best Buy, Apple, Wal-Mart Stores, and Amazon.com, creating a bull call spread position in Apple, and creating a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Longtime Fool contributor Rick Munarriz has purchased more tunes through Amazon than iTunes over the past year, given Amazon's healthy promotions. He owns no shares in any of the companies in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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Andre Gregorvich

Walmart just sent an email to all music download users announcing the service will end Aug. 29, 2011. I used the service for years simply because I want MP3s, not the locked-down files from Apple.

August 12 2011 at 7:51 AM Report abuse rate up rate down Reply