MUSIC and games group HMV boosted its position in the digital entertainment market today by acquiring a 50 per cent stake in online music services company 7digital.

HMV, which owns book chain Waterstone's, said 7digital will become its single supplier for all existing digital operations.

7digital's technology currently powers services for clients in Europe and America, including Spotify and Last.fm, as well as music labels and artists.

News of the joint venture emerged as HMV reported a solid start to its new financial year, with like-for-like sales at its music and games retail chain ahead 1.7 per cent in the 18 weeks to August 29.

The figure for Waterstone's was down 3.4 per cent, but HMV said this was in line with the rest of the book market. HMV, which is paying £7.7m to 7digital's venture capital backers for the 50 per cent stake, said the internet company's co-founders, Ben Drury and James Kane, will continue to lead the business they set up in 2004.

As well as access to a catalogue of more than six million digital music tracks and video entertainment, 7digital will also provide HMV with a new e-books store, enabling Waterstone's to develop its position in the digital market.

HMV operates 400 stores in five countries, as well as 313 Waterstone's outlets.

Its total sales growth in the UK and Ireland in the 18 week period was 12.5 per cent, helped by the integration of 29 stores from collapsed chain Zavvi.

Simon Fox, chief executive, said the company saw market share gains across all product categories and described the 7digital joint venture as an `exciting new step' into the fast-growing digital market.

He added: "We believe 7digital is the best partner to help us accelerate our growth in digital entertainment and to become a major player in the market for legally downloaded entertainment." Tweet