UK music retailer HMV is preparing to launch its own music download service, according to The Daily Telegraph.

The company controls 25 percent of the UK CD market. The new HMV Digital service is set to debut on 5 September, after one year and £10m of development.

HMV is working with Microsoft and MusicNet to offer the service, which will use Windows Media as its default digital rights management system - effectively locking out the 75 percent of music player owners using iPods.

A subscription-based service will also be available. HMV also plans to offer varying price tariffs, a move understood to have been requested by two of the four major music labels.

HMV's head of digital music, Mark Bennett, stressed the music retailer's advantage in terms of its existing relationship with independent labels. "We have a great relationship with the independent labels,” he said.

“We probably know indies that other digital retailers have never heard of. Some of the tactics used by new entrants into music retailing, and particularly iTunes, have been a little bit aggressive and arrogant."

A month of live gigs at HMV's Oxford Street store is also planned to support the new service.