First Amazon cuts it's lowest price for songs at its new UK store to 59p (20p less than that on Itunes), then iTunes cuts prices on a smattering of popular releases, including albums by Coldplay and Oasis, to £4 (for a limited time).

The UK Amazon mp3 store  is likely to be a loss-leading venture, similar to their US store. As Damian Peachley, Amazon spokesman says, "I don't want to get into the economics of it, but we want to encourage our customers to get into MP3 who have never downloaded music before."

As many Americans who've used the Amazon service know, unlike Itunes, the company offers music free of "digital rights management"--the encryption technology that prevents downloaded songs from being played or copied on some devices.

The prices at the new Amazon UK store are less than half of many other online mp3 retailers, including Play.com, Tesco, and 7digital.

This may all mean that in order to compete, other services will slash prices. Good for the consumer temporarily, but if this all ends up with losses for these companies, it will not last. [Telegraph]