Virgin Digital Shuts Down

Virgin Group Ltd. will shut down its online music subscription and download service in the U.S. and U.K. next month, leaving one less competitor for Apple Inc.'s iTunes Music Store.

In the U.K., Virgin Digital stopped selling tracks last Friday, and is no longer accepting new customers. As of Friday, only existing customers will be able to access the service, and the site will shut down for good on Oct. 19.

The U.K. version of the site said users with more than one month of outstanding subscriptions will get a refund, but unused credits for song downloads should be used and won't be refunded. U.S. users of Virgin Digital will be able to use their credit on Napster LLC's music download service.

The pending demise of Virgin Digital marks another casualty among online music stores, which have generally received lukewarm reception from consumers with the exception of Apple's market-leading iTunes service.

Since Virgin Digital used digital rights management (DRM) technology from Microsoft Corp. to manage how songs could be played and transferred to portable devices, the service was not compatible with Apple's iPod line, which uses different DRM technology and file format.

The Virgin Digital service allows customers to download tracks up to four more times to replace lost or damaged copies. Since that option will no longer be available when the store closes, the company advised customers who purchased tracks to back them up by burning the songs to a CD. Burning the tracks will let those customers re-import the tracks to the computer as MP3 files.

Virgin also offered a subscription service that let people access an entire catalog of songs as long as they continued to pay the monthly fees. Those songs, which used Microsoft's DRM, would be unplayable if the person's subscription expired. Once the club closes, subscribers will also lose access to those songs. As part of the terms of subscription service, users were not allowed to burn those songs to CD.

Virgin Digital officials could not immediately be reached for comment on the service's closure.

The Virgin Digital store is not the only one to fold in the face of competition from Apple's iTunes -- or from illegal downloads.

Last month, MTV Networks, which is owned by Viacom Inc., said it would merge its Urge music service with RealNetworks Inc.'s Rhapsody service. Urge, which was a partnership between MTV and Microsoft launched in May 2006 that failed to effectively compete with iTunes.