iTunes now holds 66% of digital music market

Retail

According to new third quarter figures issued by market research firm NPD Group, Apple’s iTunes music store now accounts for 66.2% of online music purchases, up from 63.2% in the same quarter last year. Apple’s biggest competitor in the space, Amazon, currently holds 13.3% of the market. Executives from major labels suggest the disparity could be even larger, with Amazon owning just 6% to 10% of the market while Apple’s share is nearly 90%. Pricing, often a major factor in retail sales, does not appear to have a major impact on digital music sales. Amazon’s strategy, beyond various distribution deals, is to undercut iTunes. Amazon’s average selling price for popular albums is significantly lower than the $9.99 to $14.99 Apple often charges, and even deeper discounts can be found regularly through promotions like “Daily Deals.” Despite Amazon’s best efforts, however, iTunes’ digital market share continues to grow and Apple’s service remains the global leader in music sales, having surpassed Walmart to take the No. 1 spot in 2008.

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44 Comments
  • Norm

    I find this extreme laughable. DROIDtunes is going to totally revolutionize the way we as consumers get music on the internet. Music should be open source just DROID. Free for all to enjoy just like DROID.

  • anon

    Not sure why people by music from iTunes. MP3 just seems easier. All software and hardware supports it. I’m an Amazon customer until Apple goes MP3 or everyone just decides to make Apple’s format the standard.

    • http://www.flickr.com/photos/PACMan3000/ Paul A. Chapel

      AAC is not an Apple standard.

      • Anonymous

        iTunes gave up on DRM a while ago for their music files, they should just be plain AAC files nowadays unless I’m mistaken.

    • Pinawave

      i only buy from amazon. sorry itunes but drm can suck it!

      • Anonymous

        You do realize DRM came about because of the RIAA. If Apple and other Digital music stores could have just sold it from the start with no DRM they would have. Get your facts straight. Complain to the RIAA for making the mess.

  • Anonymous

    This just confirms what I’ve suspected for a long time, by forcing iPod/iPhone/iPad owners to use iTunes, it gives Apple an unfair advantage in the sale of digital music.

    You can be sure if this were MS, the EU and maybe even the US government would be all over this already.

    • Norm

      To be fair, I use Amazon to buy music for my VERIZON WIRELESS ipad…so that is not entirely true. I have also put anything i’ve bought of itunes on to each and all 6 of my DROIDs.

      • Anonymous

        I’m not saying it applies to every person who owns an iDevice but you have to admit it’s a significant advantage to force people to install your media store just to connect their device to their computer (and before anyone says it, I’m fully aware that alternative options exist but the majority of iPod/iPhone/iPad owners will be using iTunes).

      • Ernie

        So what do you think that means to internet companies when Google has 70% and growing share of the search business? Is that right? Fair???

      • Anonymous

        If it doesn’t apply to every person, does it apply to _any_ person? Is there anyone complaining that they can’t figure out a way to buy music from Amazon and put it on their iP*? No. Personally, I think the argument is specious.

        Apple is not forcing you to use iTunes to buy music, only to sync your iP* with your computer. Very significant difference. I’m _forced_ to buy a $19 power cord, but I’m not forced to buy Power from Apple. they give me free software to manage my computer, and it happens to have a hook to easily buy (anything;-) apple sells. Cross sell and Upsell are not placing anyone at a competitive disadvantage.

        In any event, you’re backpeddling. As a consumer, I EXPECT a convenient way to load music onto my personal device. Apple has provided it. They have also provided a convenient way to purchase music and other content electronically. I buy Amazon music all the time, as well as CDs from the Pawn shop. Hardly an anti-competitive (unfair) stance by Apple. It is significant to provide a highly integrated device management system that includes managing both music purchasing and my music library.

        bottom line: significant advantage != unfair advantage.
        smart != illegal.

      • Anonymous

        @Ernie: I don’t really see what that has to do with anything.

        @theothergeoff: no-one’s back-pedalling.
        And when did I say Apple force you to buy music from iTunes? I didn’t.

        But they do force users to install a piece of software just to copy music from a computer to a portable device and it just so happens to be the same piece of software that they use to sell music.
        If you want to pretend that that doesn’t give them an advantage, that’s up to you.

      • Anonymous

        Not to say what I do is correct but I never buy music from iTunes. I purchased 1 episode of The State but I never purchase music from iTunes. I use a number of “illegal” sources. I’ve never felt I’ve needed to purchase music from them especially when there are alternative to 99 cents a song. Good for them but I’m not spending money on iTunes.

      • Kilofoxtrot

        @Step666

        Until Apple forces me to buy an iPhone, iPad, Touch etc etc, then all your other “force” arguments are invalid.

      • Anonymous

        You can express your dislike for a company but don’t let your opinion change facts.

        The majority use iTunes because they like the portal and how its integrated with the iDevices. They are not forced to buy music off of iTunes. They can buy DRM free music from anywhere and copy it on to the iDevices. Even Apple sells DRM free music, once the industry ALLOWED them to.

        First one guy complains DRM is Apples fault, when its the content rights holders fault. Y’know RIAA, TV networks and so on. Now Apple is forcing them to buy music through iTunes?

        What next? Complain the built in Xbox Live App on WinMo7 phones is forcing them to get an Xbox and subscribe to XBL. Really?

    • Goofan (aka Apple Hater)

      And just why won’t they (EU and US government) go after them? Do you think Steve Jobs and Co has better lobbyists than MS? Please do tell. That way we can let Google know how to deal with it when they have 100% of the search, 100% of the mobile and 100% of the TV advertising and market share throughout the world!!!!! That, my friend, will be the day!

      • Anonymous

        I have no idea how they get away with it.

        I also have no idea why when MS are forced to provide Windows with no web browser pre-loaded and a pop-up that links to various competitors’ browsers as well as their own, that Apple get away with pre-loading Safari in OS-X.
        Using their software updater to coerce people who didn’t already use it to download and install it – quite how is it an ‘update’ if you’re installing something you didn’t previously use/have/want?

      • Anonymous

        The difference is that MS forced OEMs to install IE (it’s a DELL computer). Apple has no OEMs. It’s THEIR product.

        Look at Android. Verizon can put BING search on their android phones… Microsoft wouldn’t let Dell put Netscape on their (DELL) computers. Big Difference.

        Your last point is valid. Apple sucked big rocks on that.

        But if you want to use an iPod, you need ‘an’ interface. Apple built a HW/SW one. If you don’t like it, buy a MP3 player that just treats the device as a USB disk. Problem solved. Apple in no way prevent that. Microsoft, on the otherhand, prevented Dell et al from selling non MS installed computers (with licensing agreements that required EVERY Intel computer to be shipped with a Windows license, even if the customer wanted linux installed, or they would not allow you to sell an Windows installed PCs….. Now that’ s _unfair_.

      • Anonymous

        This is where the whole thing about the web browsers gets confusing because everyone seems to have a different idea as to the reason why MS were pinged.

        Someone else once tried to tell me it was because of the way MS used to integrate IE into the OS, requiring users to make use of it for installing upgrades in a way that Apple didn’t with Safari.
        But as of Win7, that’s no longer the case, so why is it still an issue for them to pre-install IE?

        You’re now saying it’s because they forced OEMs not to pre-install other browsers.
        We can be pretty certain that’s no longer happening if they’ve already been fined for it but why if they’re no longer stopping OEMs installing other browsers are they no longer allowed to pre-install IE?

        Maybe I’m missing something…

        And I’m not saying that what MS were doing was fair, clearly it wasn’t.
        But whatever their previous anti-competitive behaviour, it seems like an overly-severe measure to force them to stop including IE and to have to advertise their competitor’s products. And we’re not just talking pre-installed systems, it’s the same for all copies of Win7 purchased in the EU.

      • Anonymous

        The law moves slower than the real world. For a long time, Apple has been the little guy fighting the monopolistic behomoth (Microsoft). Now they’re the 800 pound gorilla, but it will take a while before the DoJ or FTC go after them.

        It’s true that Apple doesn’t force anyone to use iTunes, but there’s a strong vertical integration and you can argue that Apple now possesses market power in this area.

      • Anonymous

        Exactly, but if they go after Apple for strong vertical integration, it can spread to a lot of other companies like Sony, Microsoft, Toshiba and many more. The fact is they all do it. Apple like the rest will always push for you to use their family of products just like how sony will push for you to buy their TV and hook up their Blu-ray player or PS3, and their home theater and their laptops I hope @Step666 finally get it.

    • Anonymous

      Apple has backed down several times on this in front of the EU and USA FTC (specifically, on the Google Voice app in the App Store, and Opera, etc.)…

      Unlike MS, they were smart enough not to act like D*cks when it came to anti-competitiveness charges.

      Note my comment below… your use of ‘unfair’ is incorrect, and even you realize it.

      • Anonymous

        Anti-competitive behaviour is to use a position of market dominance to give yourself an advantage over the competition.

        Apple have a position of dominance within the portable media player market and they use it to force people to install the software they use to sell music.
        As I clarified above, I’m not saying that Apple force people to buy music from them but they don’t need to go that far for it to be an unfair advantage – it’s still a significant push in the direction of their own media store ahead of alternative sources.

      • Anonymous

        so you agree with me: “they don’t need to go that far for it to be unfair’ == ‘they are currently acting fair’

        So… following your own logic. They are acting fairly.

        Are they disallowing other media store sources on the PC or the Mac?
        Are they disallowing common media types on the PC or the Mac?
        Are they allowing their music to be transferred to other media?

        Bottom line… is Apple acting Exclusionary or is fixing prices or forcing a lower quality product on people? nope.

        Therefore, it’s not anti-competitive behaviour. Monopolies are not illegal… Monopolies that use their position to gain unfair advantage over competition are. Show me one instance where Apple is restraining the rights of other music vendors or device makers?

      • Anonymous

        I don’t think you interpreted what I said correctly.
        I said they don’t need to force people to buy music from them for their practices to be unfair, meaning that what they do just now is unfair.

        And yes, I willing cede that Apple are not behaving in an exclusionary manner but exclusionary practices are not the only form of anti-competitive behaviour.
        Lets go back to MS and IE – the mere act of pre-installing IE is not exclusionary yet they’re not allowed to do so.

        Clearly we’re not going to agree on this matter though and it seems that the EU and the likes share your interpretation of the current situation.

        One final question though, you touch upon Apple allowing their media to be used on non-Apple devices.
        So are you admitting that Apple’s previous use of DRM-infested AAC files was anti-competitive? Because they were allowed to do that for a long time with really no scrutiny from the likes of the EU.

  • random9T9

    Would be nice if iTunes offered lossless music…

    • Ted

      This is where current options for acquiring digital audio fall way short! The few sites that offer lossless have very limited offerings.

    • http://www.fwx.us FWX

      It would be nice if iTunes/Amazon opened in country at all – right now we only have Nokia Ovi (or whatever it’s called right now) with laughable selection of music…

  • http://brian.piersel.info Brian

    I might consider buying from iTunes if I didn’t have to install the iTunes software on my PC. Just let me download the file.

    • Anonymous

      err, can’t you do that with an iPod Touch/iPhone or iPad? I buy music all the time directly onto my iPhone from iTunes.

      • Anonymous

        You can’t buy music on your iPhone without having had to install iTunes because you couldn’t've activated your iPhone until it was connected to iTunes.

      • Anonymous

        Understood. However the OP was inferring that you couldn’t buy iTunes music without going through his PC. you can just ‘download the file’ to your iP*. I’ve never used PC ITunes so I can’t comment on the reasons why someone wouldn’t want it on their PC. (I can understand Safari, but iTunes?)

        Again, if people were upset about this, they can just buy a different device. Apple isn’t forcing them to buy an iP* or pay money for ITMS. (charging $19 for the USB power adaptor and cord… that’s gotta be illegal somewhere!!!)

      • Anonymous

        Yeah, fair’s fair, I was being deliberately perverse there.

        As for iTunes on the PC, admittedly this was a couple of years ago but when I used it it was shockingly poor.
        When I went to install it, I already had the latest version of Quicktime installed but iTunes told me I didn’t and had to install it. So, it proceeded to uninstall Quicktime so that it could re-install the very same version except it screwed up and I had to manually delete files and edit the registry so I could just get the damned thing installed – Apple’s tech support told me to contact MS, very helpful(!).
        Then when I switched to an x64 OS a wee while later, iTunes completely refused to install despite all x64 versions of Windows having the means to correctly install and run x86 software.

        And that’s another thing, why do you have to have Quicktime installed to use iTunes?
        It used to be it checked for it when you installed iTunes but you could get rid of it again, later it changed so that every time you run iTunes it checks for it and if it’s not there, it doesn’t work.

        And I agree that Apple aren’t forcing people to buy their products but I’m not aware off the top of my head of any other smartphone that requires you to install a piece of software and connect your phone to it just to get it up and running.

      • http://brian.piersel.info Brian

        I don’t have an iPod/iPhone/iPad/iWhatever. I already have another program I use for my media library, and I deleted all Apple software a long time ago after they started installing stuff without my permission and nagging me to install more.

        That’s OK, though. I’ll buy my music on Amazon.

  • drew dogg

    People still buy music?

    • Anonymous

      Just the people that expect payment for their own work. We are all pretty confident that you have an agreement with your employer that states you need no compensation for you hard work.

  • Anonymous

    For the people suggesting that their is something anticompetitive going on please know that the only company Apple would be behaving ill towards would be itself. No else sells Apple products but Apple. For Apple to be anticompetitive they would have to license out their software and then restrict some company’s uses versus their own or someone else’s. In no way can you be seen as anticompetitive when you are the only company providing your services or software.

    Apple all but holds a monopoly on digital media and monopolies are not illegal. It is the blatant abuse of ones monopoly that is illegal. That is where Microsoft screwed up. They felt that they were too powerful to lose and decided to fight instead of concede or offer a fix of the situation. Unlike Microsoft though Apple should never have to worry about falling under such scrutiny because they don’t license their software for anyone else to use. Apple’s only competitor is Apple. Any other company can build their own complete widget (think Acer with Alive) but Apple is free to do with their product as they wish.

    This growth isn’t slowing folks. The more stores they open the more first time customers Apple sees. Then the ‘halo’ effect happens. They become iTunes account holders and the cycle repeats. As long as they are opening new stores they will continue to grow.

  • http://twitter.com/Darkcloud25 Cloud San

    Hmm and who cares about iTunes at all to use this to be honest I hate Apple with a passion but from what I see I can’t find anyone that uses iTunes or with an iPhone anymore as a soldier for the US army i don’t see anyone with and iPhone or an Apple laptop and I’m always flying and everyone at the airport showing off there life and all i see today are ppl with Android devices and even more wp7 hd7s than iPhones not to mention. I see more Zune users than before and its just getting bigger. Android is on top with just the freedom of doing everything form the device and the network other than pluging up and WiFi which Apple does not care about the user. Think how is it a hands on to go device when you can’t even download a song without being hooked up to WiFi and just for laughs I use my WiFi hot spot from my my touch 4g for my friends at work so they can face time with there iPhones. So f Apple Zune and Android for life

  • Biteme

    LOL, who fokin cares..lol

  • http://pulse.yahoo.com/_TMJPXWZ43W5BFC4MHGWBBFWUCQ Dan B

    Many people i know who has an ipod or other apple product that plays music tells me your only allowed to buy music from itunes. Others won’t work. I try to correct them but it just doesn’t work. (slams head against the wall). It’s usually the less tech-savy types too.

  • itunesblows

    people actually still pay for music? idiots.

    • Goofan (aka Apple Hater)

      I know right! I hate these idiot musicians that think they should get paid for their trade. Who do they think they are????

  • Anonymous

    Amazon might be more competitive if they actually sold music outside of the US. There’s no real alternative to the iTunes store in Canada, for instance. I would use Amazon in a heartbeat if I could – I hate the iTunes software and I hate that I can’t buy anything without going through the client. I have no idea why Apple can’t just let you purchase through the website.

  • Steve

    Try Cheapermusic.net!

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