Apple's iTunes lead increasing, now selling 26.7% of US music
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.
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.
Comments
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.
There is such a thing as saturation.
5 year old iPod looks brand new too, good case is responsible for that.
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?
What?
My thoughts exactly on that 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.
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.
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.
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.
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.
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.
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.
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
What about Zune Marketplace? *snicker*
Now that just being mean! Funny though...made me laugh!
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.
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.
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?
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]