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Last Thursday, Virgin Entertainment Group announced an agreement with RedDotNet, a Digital on Demand company, that Virgin says will allow its customers to download music and create custom CDs, DVDs, and MiniDiscs in-store. Virgin describes the deal as "a revolutionary development heralding a new wave of music retailing." As part of the agreement, Virgin will become a shareholder in Digital on Demand, RedDotNet's parent company.

The first unveiling of this approach to audio distribution will be at the chain's newest Megastore, set to open in Columbus, Ohio next month. The company says the move is part of the chain's Megastore 2010 initiative, which Virgin hopes will integrate a variety of new technology and retail concepts into Virgin's next-generation location-based store strategy. It follows the recent launch of the company's online e-commerce site, Virgin Megastore Online.

Under the terms of the agreement, RedDotNet says it will distribute major-label and online content over its high-speed broadband network and secure server system to Virgin Megastores, where digital kiosks will enable customers to find, preview, and select music for purchase. Once selected, RedDotNet says that the music can be pressed as a CD, DVD, or MiniDisc, or digitally uploaded to a memory device compatible with the Secure Digital Music Initiative (SDMI). The product is accompanied by full-color liner notes, cover, and CD art that the company claims is identical to traditionally manufactured product.

Scott Smith, president of RedDotNet, says that "We're delighted to be chosen as the first digital technology partner for the Virgin Megastores, a retailer renowned for its focus on creating great consumer experiences. Our technology fits perfectly into their vision for the online-enabled entertainment content retailer of the future, Megastore 2010."

RedDotNet and Sony Music Entertainment recently announced an agreement for digital distribution of Sony Music albums over the Red Dot Network. It is expected that agreements with other labels will follow.