Apple's iTunes has hit a bum note with its competitors in the UK online music market by deciding to sell the charity single Do They Know It's Christmas? at a reduced price.

iTunes said today that it would be selling the star-studded track for 79p, which is 70p short of the £1.49 demanded by Band Aid organisers. The company will be making up the difference out of its own pocket.

The apparently magnanimous gesture has been condemned by Apple's competitors who have accused the company of hijacking the biggest charity event of 2004 to win itself more customers.

The big players in the online music industry, including the re-legalised Napster, HMV and MyCokeMusic, had all agreed to sell the single for £1.49 and pass the proceeds to Band Aid for projects in the strife-torn Darfur region of Sudan and elsewhere in Africa.

Apple refused last week to join in, saying that its business model depended on a uniform price of 79p per track, which it could not change. Given iTunes' dominance in the UK market, it was feared that its decision could cost Band Aid dear.

The decision also brought some unwelcome publicity for Apple, which uses its sale of online tracks to leverage sales of its iPod MP3 player, and vice-versa. Apple is already facing an Office of Fair Trading investigation into why it sells tracks for 79p in the UK but only 68p in France or Germany.

The company said in a statement today: "Apple is pleased to offer the Band Aid single on the iTunes music store to raise funds for the plight of hunger and poverty in Africa. Since all songs on iTunes are 79p, we've decided to sell it for 79p and Apple will donate an additional 70p for each downloaded song to the Band Aid charitable trust."

Napster was not impressed. A spokesman said: "We are pleased to see that iTunes has finally agreed to sell the Band Aid 20 single, but disappointed they've chosen to use the biggest charity event of the year to undercut every other music retailer in the UK.

"The retail price of £1.49 was requested by Band Aid and accepted by everyone involved, from the labels through to the shops and online music services. Napster is honouring that commitment and actively supporting the pricing with a number of marketing activities."

The physical Band Aid single, featuring Dido, Sir Paul McCartney and Robbie Williams, was released in the shops on Monday and sold 122,000 copies in its first two days.

Priced at £3.99, and including two added versions of the original 1984 track, it is guaranteed to be the Christmas No 1 and could even hit its target for physical sales of one million.

Gennaro Castaldo, a spokesman for HMV, the high street retailer which also sells tracks for download, said that it was better that iTunes sells the track and passes on the proceeds than that it does not sell it at all.

But he added: "It's interesting that this move seems to have taken place after criticism in the media, including The Times newspaper."

Apple UK declined all comment beyond its statement, although a spokeswoman for the firm's PR agency said the Band Aid song had immediately become its bestselling track. Mercury Records, the Universal Music Group subsidiary which released the track, also declined to comment.

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