Best Buy, a large electronics retail chain in North America, said Thursday it too wants to be in the online music business.

The company is teaming up with music service provider RealNetworks and digital music player maker SanDisk to launch the Best Buy Digital Music Store. Best Buy is using RealNetworks’ Rhapsody to run its online shop. Of course, a music service wouldn’t be complete without hardware offerings. Best Buy also is promoting SanDisk’s Sansa portable players for the launch, which takes place on October 15.

The alliance is the latest foray by an electronics retailer into the online music market. Once the market was divided among makers of digital music players and web sites that sell songs individually or by subscription, such as Napster, Yahoo, and RealNetworks.

Apple Computer proved that offering both a music service and music players is a winning formula. Now consumers can buy downloadable songs online from off-line chains such as Wal-Mart, which sells everything from frying pans to fishing tackles. Target, another general-purpose retail chain in the United States, is reportedly working on an online music store as well.

Needless to say, Best Buy, which has 840 stores in the United States and Canada, isn’t at the forefront of the online music business. Its advantage: access to consumers through its physical stores and an already-established online shop that peddles electronic devices and software.

The deal will benefit SanDisk, which has been promoting RealNetwork’s service through its Sansa music players (see Real, SanDisk Team on Music). SanDisk, which made its mark as the world’s largest memory card maker, began selling MP3 players two years ago. The Milpitas, California, company has found success in selling its own branded memory cards in retail stores, and it has used that experience to sell music players.

SanDisk isn’t the only hardware maker that seeks to replicate Apple’s success. Microsoft, which plans to introduce its own portable digital music player, Zune, next month, also plans to launch an online music service (see Microsoft Reveals Zune Price).

Meanwhile, Samsung is working with MusicNet to launch an online store later this year, first in Europe (see Samsung Intros Music Service).

Best Buy shares rose $0.30 to $56.90 per share in recent trading. RealNetworks’ shares rose $0.55 to $11.46 per share while SanDisk’s shares declined $0.98 to $55.40 in recent trading.

Contact the writer: UWang@RedHerring.com

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