British-based international retail chain Tesco will open an online shop next month selling music, films, games and television programmes for iPods and other digital players, competing directly with Apple's iTunes store. The service, dubbed Tesco Digital, will offer 3.3 million music tracks, with 1.6 million of them in MP3 format. Movie and game downloads will be added at a later time.

"We wanted to create an exciting and easy-to-use entertainment shop that Tesco customers of all ages and technical ability can use and trust. We're starting out with a comprehensive music offering, but customers can expect downloadable TV and films as well as games to buy very soon," said Tesco commercial director Graham Harris.

Tesco already has a music download site, but it is limited and its music cannot be directly downloaded on iPods. The new site will ditch its existing Windows Media-based music download service to feature DRM-free tracks, playable on any computer or device.

Meanwhile, Apple's iTunes music store has managed to overcome retail giant Wal-Mart to grab the first place in the retail sales of music. The previous month, iTunes ranked second behind Wal-Mart. The iTunes Store became the largest music retailer in the US based on the amount of music sold during January and February 2008. Apple’s iTunes surpassed Wal-Mart, which last month had the first place.

However, Amazon.com's MP3 service is growing steady, NPD reports. While Apple's DRM-free tracks are available only from EMI Music, Amazon's service offers unprotected MP3s from all four of the major record labels. MySpace isn't going to be left out of the music download business, either: the biggest social-networking site, has announced earlier this month its latest initiative, MySpace Music, a new service through which the News Corp.-owned website will offer music (and not only) to its users.