The initial reviews of Wal-Mart's online music service aren't exactly positive.
What Wal-Mart brings to the table is a huge customer base and the ability to squeeze suppliers to the point where they can no longer bleed (which is one of the reasons more than a few jobs in the US have gone overseas, but that is a different topic for a different blog)
No one is making money at 99 cents a track - much of that is due to weak demand (unless you are Apple) and about 70% of the charge going to the record company. Wal-Mart has a reputation of bullying the major record companies. It seems safe to assume that the majors are getting less than 70 cents from Wal-Mart.
This could be done in many ways. On the average, Wal-Mart appeals to a somewhat downscale group (a surprisingly large percentage of Wal-Mart customers don't have credit cards or Internet connections). The majors may be able to bulk up music that predominantly appeals to Wal-Mart customers. It is possible that a mutual agreement could actually produce more business for both parties. Of course both are somewhat evil, so it is an interesting game.
It does sound like Wal-Mart (actually their online partner -- Liquid) doesn't have the bugs worked out -- if these are features, rather than bugs, the service is dead before it leaves beta.
So will we end up with Wal-Mart and all of the other Windows Media Player services in a price war going after the high volume lower end customer with a bloody set of consolidations along the way? At the same time Apple is higher priced, but offers more interesting content, navigation, players, etc? It wouldn't be the first time something like that has happened...