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Apple's iTunes lead increasing, now selling 26.7% of US music

post #1 of 31
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Since edging out WalMart in 2008 to become the top music retailer, Apple has increased its lead with iTunes and is now outselling both Walmart and second place BestBuy combined, while handling more than half of all digital music sales in the US.

According to a report published by Billboard, Apple's share of music sales increased by more than five percentage points, from 21.4% in 2008 to 26.7% last year. That's more than double the 12.7% share of the US music market iTunes took in 2007, when the iPhone was first announced.

iTunes vs Mobile Ringtones

Apple's expansion in digital sales was observed despite a collective decline in sales among mobile providers. Music sales by Verizon Wireless, Sprint Nextel, T-Mobile, and AT&T fell from 6.6% in 2008 to 4.9% last year, deflating the optimism that cellular providers would deliver the next big market for music, primarily thorough sales of ringtones.

Apple's introduction of lower priced ringtones and free tools within iTunes that enable users to create their own ringtones may likely have played a part in stalling the growth of the $2-3 per ringtone business being pushed by mobile providers.

Continued decline of physical media music

Outside of digital sales, the market for music sold on physical media is in even worse shape, with CDs and other music formats sold through brick and mortal retail stores plunging from a 57.5% share of the music market in 2008 to a 49.3% share last year.

That allowed digital downloads to eclipse the market share of physical media in the US. Half of all digital media sales occurred through Apple's iTunes Store.

Walmart, the CD sales leader, saw its share fall from 15% to 12.5% over the same year period, while second place BestBuy fell from 10.7% to 8.7% share, despite acquiring the digital media Napster business.



Amazon vs iTunes

Amazon, which sells both CDs and digital downloads, increased its share of both markets, with its physical media sales jumping from 4.2% to 5.8% (at the expense of record stores) and its overall combined share of music sales increasing from 4.9% to 7.1%. Amazon's digital MP3 sales amounted to just a 1.3% share of the market in 2009, up from 0.8% in 2008, but far short of Apple's 26.7% share and its year over year growth in iTunes.

Billboard wrote that Amazon's growth and share was "still well short of where major labels had hoped Amazon's download store would be by now, dimming earlier expectations that it will be able to significantly reduce the labels' heavy dependence on iTunes for digital sales."

The attractiveness of Apple's iTunes Store for music, and the inability of Amazon and other firms (including Sony Ericsson's "PlayNow" online service designed to compete with iTunes, or the Sony BMG/Universal Music "Total Music" service that was shuttered last year) to steal customers away from the iPod maker's music store offerings raises some doubts about Google's newly announced acquisition of Simplify Media, which the company is expected to turn into an online music buying service directed at its Android users. Google's AdMob subsidiary reports that Android users do not buy or even download as much media as Apple's customers.

Apple continues to advance its iTunes music, video, iBooks, and mobile software sales into new markets globally, including recent new expansions of iBooks and app sales in Germany.
post #2 of 31
Google won the battle today. But Apple is winning the war. Now if the music can turn into TV and Video!
post #3 of 31
It just shows what happens when you make a better mouse trap....

This is the thing all the other me too companies have not figured out, just you can sell some stuff and make a little bit of money, but as long as there is one guy who provides a complete solution that works and you do not have to think about how to make it work you will loose to that guy.
post #4 of 31
I bought over 8000 songs in several genres few years ago and haven't bought anything since.

There is such a thing as saturation.

5 year old iPod looks brand new too, good case is responsible for that.
post #5 of 31
By the 2010 report I wager Amazon is #3 and by 2011 it'll be #2, yet Apple will be taking about 1/3 of the market by then.
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post #6 of 31
WalMart is known to be king of the supply chain but offers no competition to Apple in distributing music. This is because Apple controls digital distribution of music. Once Apple moves ITunes to the cloud, you will see their music sales double because they will be able to control illegal downloads.
post #7 of 31
Quote:
Originally Posted by phoebetech View Post

WalMart is known to be king of the supply chain but offers no competition to Apple in distributing music. This is because Apple controls digital distribution of music. Once Apple moves ITunes to the cloud, you will see their music sales double because they will be able to control illegal downloads.

What?
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post #8 of 31
Quote:
Originally Posted by solipsism View Post

What?

My thoughts exactly on that post.
post #9 of 31
What about Zune Marketplace? *snicker*
post #10 of 31
Quote:
Originally Posted by phoebetech View Post

WalMart is known to be king of the supply chain but offers no competition to Apple in distributing music.

Your right, they don't because Walmart doesn't provide the seamless hardware and software combination like Apple does.


Quote:
This is because Apple controls digital distribution of music.

Ah, the music labels and independents decide that. But they want to make money and Apple has a great experience people like, so they stay.


Quote:
Once Apple moves ITunes to the cloud, you will see their music sales double because they will be able to control illegal downloads.


So what your saying is when people keep their music in the (mythical) iTunes cloud storage that Apple won't allow music from other sources.

Well people have and still buying cd's, there are other music stores that people buy music from and Apple would lose hardware sales if they pulled a "Sony" and only allowed iTMS purchased songs in the iTunes cloud.

DRM is gone bye bye so songs can be used elsewhere and on other services, programs and devices, but the songs are digitally tagged with the original purchasers information. So your idea is possible, Apple could disallow songs tagged with other than the iTunes cloud users information, but cd rips don't have that data.

Music doesn't take that much space on devices, unless your a big music collector like me, I doubt many people would bother to keep them all in the "cloud" where lack of internet, slow service, data loses and outages would deny one playing their music anytime and anywhere they wished.
post #11 of 31
Quote:
Originally Posted by phoebetech View Post

WalMart is known to be king of the supply chain but offers no competition to Apple in distributing music. This is because Apple controls digital distribution of music. Once Apple moves ITunes to the cloud, you will see their music sales double because they will be able to control illegal downloads.

Apple doesn't "control" the distribution, they just happens to be the only one with a solution that goes from buying (or ripping), storing, organizing and listening to digital music.

Other companies for some reason doesn't understand. They just blankly blame the "apple lock-in", while we all know only a small percentage of people actually buy from the iTMS.
post #12 of 31
Quote:
Originally Posted by stevetim View Post

Google won the battle today. But Apple is winning the war. Now if the music can turn into TV and Video!

Until they have a shipping product they have "won" nothing.
post #13 of 31
Quote:
Originally Posted by lkrupp View Post

Until they have a shipping product they (Google) have "won" nothing.

Speaking of not shipping a product yet... where are they at with GoogleTunes?

Should be announced any day now... should be up and running by Winter 2010 along with Flash mobile on Android and the GoogleTablet.
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post #14 of 31
if only they sold music in high quality standards, gave you an optional physical cd when you buy a full album and made a cloud service for iTunes...

Agree Google made some news today. What direction it is moving? Apple sure has a strategy and going towards achievement...slow, step by step...but isn't it how great things are done anyhow?

Guess apple tv is going to be seriously updated this year. At least storage must be updated to 1 and 2 TBs.
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post #15 of 31
Quote:
Originally Posted by Maestro64 View Post

It just shows what happens when you make a better mouse trap....

This is the thing all the other me too companies have not figured out, just you can sell some stuff and make a little bit of money, but as long as there is one guy who provides a complete solution that works and you do not have to think about how to make it work you will loose to that guy.

Well said, Maestro. There is always some element missing with Apple's competitors where they don't offer the 'complete solution!' It's the Apple eco-system baby!

Tight integration with their hardware and software, from iMac Desktops to your laptops, iPods iPhones and now iPads with music, video, photos, contacts, email, internet, etc., etc. I would even say AppleTV fits the bill for me just for the viewing of my photos in the slideshow with music on behind!

Best
post #16 of 31
Quote:
Originally Posted by LagunaSol View Post

What about Zune Marketplace? *snicker*

Now that just being mean! Funny though...made me laugh!
post #17 of 31
Quote:
Originally Posted by stevetim View Post

Google won the battle today. But Apple is winning the war. Now if the music can turn into TV and Video!

Honestly I believe Apple will just copy what Google is doing with Google TV. That wouldn't be that hard for them. I'm sure the Google TV will motivate them to update AppleTV.
post #18 of 31
Quote:
Originally Posted by LagunaSol View Post

What about Zune Marketplace? *snicker*

Microsoft has enough money to keep it going forever no matter how poorly it sells, when the iPhone and the rest of us are history, the Zunes and the cockroaches will crawl out from under their rocks to inherit the earth.
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post #19 of 31
The WalMart numbers don't surprise me (because their selection is weird, and anyway who wants to associate with that crowd).

But I'm shocked at how far back Amazon is. Fifth place, with 7% of total market share, and just past one percent of the digital download market?

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post #20 of 31
If google can turn spotify into an application (not a web app) that can be easily synced with androids they might have a chance. So far iTunes is just way easier to do, and is exactly the same price. I think they even got rid of DRM on most of their songs.
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post #21 of 31
Quote:
Originally Posted by phoebetech View Post

WalMart is known to be king of the supply chain but offers no competition to Apple in distributing music. This is because Apple controls digital distribution of music. Once Apple moves ITunes to the cloud, you will see their music sales double because they will be able to control illegal downloads.

there has to be some mechanism for uploading music to the cloud that is "purchased in brick & mortar stores" and a way to upload my existing library - with more than 500 albums ripped from my own hard copies of CD's i've purchased in addition to my iTunes purchases... otherwise there will be mass resistance to the iTunes cloud.

...and by "music purchased in brick and mortar stores" i mean any music not purchased through iTunes [hint hint]
post #22 of 31
Quote:
Originally Posted by stevetim View Post

Google won the battle today. But Apple is winning the war. Now if the music can turn into TV and Video!

Google didn't win any battle today. I see it as more of a declaration of war.

The funny thing is that all the focus seems to be on what Apple is going to do next to answer GTV. I haven't even heard microsoft mentioned once. The seem to be slipping into obscurity quickly.
post #23 of 31
Well Apple has repeatedly said it doesn't make any money on iTunes, but this is good news for Apple on the back end in regards to selling more iPods, iPads and iPhones.
That's the only good I see from this, which is pretty substantial.
Because of the iTune integration with those products, it keeps me away from seeking alternatives to those devices, and non-Apple computers too really.
I commented a few weeks ago on a blog about Ubuntu. I'd be willing to try it, but lack of iTunes keeps me from trying Linux. So that keeps me in the Mac realm too. Windows of course is a non-starter for me.
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post #24 of 31
Quote:
Originally Posted by solipsism View Post

What?

What I think he is trying to say Solipsism, is that iTunes needs to get into distributing music via the cloud like Spotify does. By distribution, I don't just mean selling it, but listening to your music without a significant hard drive foot print like our friends from Europe have done.

I harp on a bit about Spotify here, but it is a breathtaking application and is the only real threat to iTunes on the horizon for Apple that I can see. Of course I am aware that the money is in the hardware-software tie up, which is where Apple excels, but it IS nice to have that name recognition and market force that Apple have in music right now... Whether Apple would be where they are at present if they didn't have that penetration in the music download business is a moot point.

I have high hopes for this Lala technology though. Here's hoping Apple can take what the Spotify lads have done and run with it. A lot of this will come down to how far they can push those pigs in the music labels into giving them the same sweetheart deal they have for Spotify. The labels own 10% of Spotify though, so... who knows...

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post #25 of 31
Quote:
Originally Posted by lostkiwi View Post

What I think he is trying to say Solipsism, is that iTunes needs to get into distributing music via the cloud like Spotify does. By distribution, I don't just mean selling it, but listening to your music without a significant hard drive foot print like our friends from Europe have done.

I harp on a bit about Spotify here, but it is a breathtaking application and is the only real threat to iTunes on the horizon for Apple that I can see. Of course I am aware that the money is in the hardware-software tie up, which is where Apple excels, but it IS nice to have that name recognition and market force that Apple have in music right now... Whether Apple would be where they are at present if they didn't have that penetration in the music download business is a moot point.

I have high hopes for this Lala technology though. Here's hoping Apple can take what the Spotify lads have done and run with it. A lot of this will come down to how far they can push those pigs in the music labels into giving them the same sweetheart deal they have for Spotify. The labels own 10% of Spotify though, so... who knows...

It sounds like he may have been hinting on that, but nothing he said made any sense to me, hence my comment.

I expect the Lala purchase to work out to be a server-side iTunes Library database that doesn't store your 'actual' files on the server or stream from your Mac or PC, but use duplicate files that match the ones on your local drive to stream audio to your device.
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post #26 of 31
Quote:
Originally Posted by Robin Huber View Post

Microsoft has enough money to keep it going forever no matter how poorly it sells, when the iPhone and the rest of us are history, the Zunes and the cockroaches will crawl out from under their rocks to inherit the earth.

well yes, the cockroaches may not even outlive ballmer (or schmidt...)

so what happened with google on this? why aren't they selling music like apple? they're copying off of everything they do
post #27 of 31
Quote:
Originally Posted by AppleInsider View Post

Since edging out WalMart in 2008 to become the top music retailer, Apple has increased its lead with iTunes and is now outselling both Walmart and second place BestBuy combined, while handling more than half of all digital music sales in the US.

According to a report published by Billboard, Apple's share of music sales increased by more than five percentage points, from 21.4% in 2008 to 26.7% last year. That's more than double the 12.7% share of the US music market iTunes took in 2007, when the iPhone was first announced.

iTunes vs Mobile Ringtones

Apple's expansion in digital sales was observed despite a collective decline in sales among mobile providers. Music sales by Verizon Wireless, Sprint Nextel, T-Mobile, and AT&T fell from 6.6% in 2008 to 4.9% last year, deflating the optimism that cellular providers would deliver the next big market for music, primarily thorough sales of ringtones.

Apple's introduction of lower priced ringtones and free tools within iTunes that enable users to create their own ringtones may likely have played a part in stalling the growth of the $2-3 per ringtone business being pushed by mobile providers.

Continued decline of physical media music

Outside of digital sales, the market for music sold on physical media is in even worse shape, with CDs and other music formats sold through brick and mortal retail stores plunging from a 57.5% share of the music market in 2008 to a 49.3% share last year.

That allowed digital downloads to eclipse the market share of physical media in the US. Half of all digital media sales occurred through Apple's iTunes Store.

Walmart, the CD sales leader, saw its share fall from 15% to 12.5% over the same year period, while second place BestBuy fell from 10.7% to 8.7% share, despite acquiring the digital media Napster business.



Amazon vs iTunes

Amazon, which sells both CDs and digital downloads, increased its share of both markets, with its physical media sales jumping from 4.2% to 5.8% (at the expense of record stores) and its overall combined share of music sales increasing from 4.9% to 7.1%. Amazon's digital MP3 sales amounted to just a 1.3% share of the market in 2009, up from 0.8% in 2008, but far short of Apple's 26.7% share and its year over year growth in iTunes.

Billboard wrote that Amazon's growth and share was "still well short of where major labels had hoped Amazon's download store would be by now, dimming earlier expectations that it will be able to significantly reduce the labels' heavy dependence on iTunes for digital sales."

The attractiveness of Apple's iTunes Store for music, and the inability of Amazon and other firms (including Sony Ericsson's "PlayNow" online service designed to compete with iTunes, or the Sony BMG/Universal Music "Total Music" service that was shuttered last year) to steal customers away from the iPod maker's music store offerings raises some doubts about Google's newly announced acquisition of Simplify Media, which the company is expected to turn into an online music buying service directed at its Android users. Google's AdMob subsidiary reports that Android users do not buy or even download as much media as Apple's customers.

Apple continues to advance its iTunes music, video, iBooks, and mobile software sales into new markets globally, including recent new expansions of iBooks and app sales in Germany.

There's 1 reason iTunes sells more music than anyone else. Most people own iPods, which means most people use iTunes. When you purchase music from the iTunes store it's placed directly in your music library automatically. With every other service, you're going through that extra step to put the music in your iTunes library, in the proper directory.

For most people (the 70% computer illiterate population), this is too much effort. I have friends who work on Mac's all day editing video, recording music, doing post production of photos. And most of them don't understand where their music is stored, beyond the iTunes GUI they are completely lost.
post #28 of 31
Quote:
Originally Posted by island hermit View Post

Speaking of not shipping a product yet... where are they at with GoogleTunes?

Should be announced any day now... should be up and running by Winter 2010 along with Flash mobile on Android and the GoogleTablet.

gPhone, gTV, gTunes, gPad.... I think Eric Schmidt is behind the innovation... what a loss for Apple's board...
post #29 of 31
Quote:
Originally Posted by Maestro64 View Post

It just shows what happens when you make a better mouse trap....

.



Back in the Napster days, the music execs would lament that you could not compete with free. Apple proved not only that you could, if you offered a compelling product, but also that you could compete head-on with free and still beat every other purchase source.

It is a remarkable achievement.
post #30 of 31
Quote:
Originally Posted by Soskok View Post

if only they sold music in high quality standards, gave you an optional physical cd when you buy a full album and made a cloud service for iTunes...


Quality doesn't matter to most people. Convenience trumps quality every time, at least in modern America. Price figures in very heavily as well. Quality is something that relatively few people value over the other factors.
post #31 of 31
Quote:
Originally Posted by MacTel View Post

Honestly I believe Apple will just copy what Google is doing with Google TV. That wouldn't be that hard for them. I'm sure the Google TV will motivate them to update AppleTV.

Apple is not the type to sit around and then suddenly react. Despite the appearance that Apple has done nothing on AppleTV since the last update, I'm sure that they have been working on adding new capabilities all along. When a new AppleTV finally arrives, many of its new features may seem to "copy" Google's offering but, in fact, would have been under development for quite some time.

My thought is that if Google has introduced something innovative and new here (i.e. that Apple hadn't already started on) then it probably won't make the next update. Apple is not prone to slamming in a desirable feature just to play "me-too". (Witness copy/paste and multitasking on iPhone OS.) They will spend the time to get it right.

Bottom line: if we see something added to AppleTV in the near term that looks anything like Google TV, you can be sure that it wasn't just a "copy".

Thompson
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