HMV has announced that they are working with Microsoft in order to launch a digital download service in the second half of next year. That’ll be around the time that Apple’s iTunes Music Store has sold its 500 millionth song.

HMV will, naturally, use Microsoft’s Windows Media format which they say is usable with more than 75 portable digital music players. Trouble is, the people who buy music don’t use these. They use iPods.

BT are also teaming up with a bunch of former record executives to launch a music downloading service.

Why are there so many music download sites popping up? It’s because corporate investors expect them to. It would be bizarre if a music or communications related company didn’t try to get on the bandwagon. It’s not necessarily about trying to dominate the market, more the need to keep alongside all the other companies that are doing the same.

This results in the digital equivalent of independent music stores, except they are not. They’re being set up by corporate businesses. However, such is the proliferation of these downloading services that many will eventually close due to lack of sales. This will leave a handful of services that turn a small profit – iTunes included.

The real opportunity lies in niche markets. I’ve written on this site about a few downloading services, Audio Jelly being the most recent. All of the ones I’ve mentioned cater to specific musical tastes – indie artists, dance or techno – and interestingly none uses digital rights protection on their downloads.

The digital online world will ultimately mirror the real physical world: a few major players, and many others who will cater on an independent basis to specific genres of music.