In another blow to the ever declining brick and mortar music retailer, Apple’s iTunes web site has leaped ahead of Target Corp and Best Buy Co to become the number two music retailer in the United States. The number one position is held by the retail industry behemoth Wal-Mart. The results came from data supplied by the NPD Group, a retail tracking firm.
According to data from 2007, ten per cent of all music sold in the U.S. is acquired through legal downloads. The rise of legal downloads do not balance out the decrease in the sales of physical CDs according to NPD.
The industry actually saw a jump of six per cent in terms of music purchased, but the money spent on music by consumers actually dropped by ten per cent, due in part to dismal sales of CDs. Yearly sales of CDs dropped to $40 among Internet users compared to $44 a year earlier. With the easy availablity of popular singles, the sales of CDs have continued to drop. According to data from the NPD, one million music buyers stopped purchasing CDs in 2007.
In spite of the increase in legal downloads, the number of songs bought on the Internet still pale in relation to the number of songs that are downloaded on peer to peer websites and advance preview websites.
iTunes, which counts more than 50 million customers and a catalog of more than 4 billion songs, owes a great deal of its popularity to the massive market share of the Apple iPod, which only plays unprotected mp3 files or protected files from iTunes. Eighty seven per cent of all digital music devices are Apple iPods, giving iTunes a distinct competitive advantage over other legal music download services. Other download services offer protected content that can’t be played on an iPod.
Last year, in the face of rising criticism over the FairPlay format that kept iTunes users tied to iPods, Apple announce partnerships with major music labels to make songs and CDs available in unprotected mp3 files for an additional fee.
Mp3 files will work on any mp3 player and can be transferred to an unlimited number of devices and can be backed up to any computer. They can also be burned onto an infinite number of CDs. The industry resisted the mp3 format for several years, believing that the unfettered copying would lead to widespread music copying.
Piracy continue despite the music industries insistence on protected digital formats. The recording industry faced a backlash when copy restrictions were placed on newly purchased physical CDs. When legal download numbers showed signs of fading, the recording industry finally agreed to make their product available in the portable and user friendly mp3 format.
The availability of mp3 files breathed new life into the stagnating digital music sales and propelled iTunes to a top tier music supplier. It has not stopped illegal downloads. NPD reports that there are more legal downloaders than those that use P2P to illegally download copyrighted content, but the people that download illegal files access a much larger amount of content.
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March 2nd, 2008 at 3:26 pm
I think a decline in the iTunes market share is inevitable as more and more companies start to enter the digital music market. I don’t think Apple’s decision to charge more for DRM free downloads was a particularly good one either, especially when other retailers are offering the same thing but for the original price.
March 4th, 2008 at 3:17 pm
These protected formats are silly. They probably should have reconsidered the hold on MP3-Unfriendly formats before hand.. But hey, suppose this is going to come around to them in the end.
March 6th, 2008 at 8:04 pm
At the moment iTunes has the market share as it got in there at the right time with the right companies. As someone above as said in time more rivals will appear, offering more choice at better quality without the DRM issues, then, and only then, will we see the market share if iTunes drop,
As for the bricks and mortar retailers, well, I’m sorry but they just didn’t react quickly enough.
April 14th, 2008 at 12:35 am
I really personally do not like iTunes for the fact that I can’t download the songs to my phone unless I had an iPhone, but I have a Pantech Duo. I use Napster, $15 and unlimited downloads. Again, there are differences and down sides.
April 15th, 2008 at 3:44 am
I thought iTunes was already no. 1, well I think Apple is really doing a good job on iTunes. MP3 formats should not be encrypted; you already paid for it so you can do whatever you want on it except selling it or sharing it.
April 20th, 2008 at 1:06 pm
I don’t use iTunes myself but my children have a lot of friends and they all seem to be doing it. Many of the ones who were downloading for free even seem to be switching over, since Apple is making it easier to do. This whole thing reflects that Apple has a better concept of marketing than the old-style music marketers had.
April 29th, 2008 at 9:34 am
I personally believe iTunes will take the number one spot eventually. Sure Walmart might be the biggest retail chain in the world, but Apple has dominated the digital player market with the iPod and the iPhones. To compliment those, people will obviously buy from iTunes.
To tell you the truth, I never knew Best Buy, Target, and Walmart sold music. I only heard of Napster and iTunes. Go figure.
May 2nd, 2008 at 8:46 pm
I think iTunes will be number one very soon. They only reason they are in the number two position today is because WalMart got into this business before them. While it is only a matter of time before iTunes make it to the first rank, I still prefer to pay a one lifetime membership for unlimited downloads because it is both cheaper and easier. Besides I never buy from Walmart.
May 3rd, 2008 at 6:51 am
I believe this is inevitable as kids and teenagers are more and more atuned to digital lifestyle. However I still think that brick and mortar retailers have a future, albeit more like a niche player rather than mainstream or mass market.
May 18th, 2008 at 12:39 pm
Protected formats is precisely the reason I don’t buy music online. I still prefer having the CD in my hands. I understand why they do it, but on the other hand, it’s not fair to treat every customer like a criminal; if I buy something from you, I should be able to play it wherever I want… but, no, I’m restricted to playing it wherever I happened to purchase it.
June 12th, 2008 at 5:20 am
Yes, itunes has become quite popular among the youth and has expectedly captured the second position in the music retailing industry.I am not keen on using the affiliate modules when creating a squidoo lens as it takes away from the original topic , but itunes is one module I don’t miss out on whenever creating a lens that I envision will gain big traffic.
June 22nd, 2008 at 11:55 pm
When you have the market you are on top of it all. Then once you start having serious competition you then lose momentum. I think they were a little arrogant in what they thought they had. But was not prepared for anything to end it. I agree that protecting the format is something I really never got into. Once I buy the music I should be able to play it in whatever player I want and should not be subjected to losing my money if I want to play it in a place other than itunes.