Kylie Minogue: All yours for £4.99 per month

High street music retailer HMV is to launch a download service, giving users access to the hits of acts such as Kylie Minogue, The Beatles and Elvis Presley for a monthly fee of £4.99.

The deal with download service On Demand Distribution (OD2) will put around 150,000 songs online, including the back catalogues of some of the world's best-selling bands and artists.

Music industry heavyweights BMG, EMI and Warner are all part of deal which also involves smaller, independent record labels such as Mushroom, Ministry of Sound and V2. According to a spokeswoman for OD2 the HMV service offers users access to the "largest catalogue of legal digital music" on the internet.

From September, download enthusiasts will be able pay £4.99 per month for the service. In return they will receive 500 credits which entitles them to stream 500 songs, download 50 or burn five onto a CD.

All tracks are protected by digital rights management (DRM) encryption, which means people downloading files will be unable to email them to friends or burn them onto CD themselves. OD2's spokeswoman said it is this level of security which has won over major labels still smarting from the Napster saga and blaming lost revenues on illegal download services.

This week the Recording Industry Association of America renewed its war of words with the file sharing community, blaming music downloads for a slump in CD sales - however OD2 is confident the two are not mutually exclusive, but rather are complementary.

"HMV see this as another string to their bow," said the spokeswoman. "The industry is realising that a lot of people want access to music in this way, and there's no reason why it should affect CD sales. If anything businesses are starting to see this as a way to boost sales. It gives consumers the chance to listen to something a few times to decide if they like it and they will probably then be more likely to actually go out and buy a CD."

Similarly, the streaming service provides companies with a new channel for pushing material into the marketplace. "Record companies try to push music onto the radio and television to bring it to people's attention - this is just another tool for getting the music out there," said the spokeswoman.

However, to safeguard CD sales, the price structure of HMV's service is clearly driven by a commercial imperative to establish a cost per song for the CD burning which is close to high street CD prices. In order to burn 15 songs, which is a standard album's worth of tracks, the consumer will have to part with £15 - the average price of a chart CD in most record stores.

OD2 was set up by former Genesis front man Peter Gabriel in 1999 to distribute digital music over the internet. Companies such as Freeserve, MSN.co.uk and Tiscali have already signed up to the service (read http://www.silicon.com/a49423 to find out more).