NPD: Apple's iTunes Music Store climbs to 66% of digital music market

Posted:
in iPod + iTunes + AppleTV edited January 2014
According to new data from NPD, the iTunes Music Store gained three percent year over year, giving Apple 66 percent of the digital music market, while Amazon's strategy of daily bargains, where it sells albums for a loss, resulted in just a 2 percent gain to 13 percent.



The NPD data, as reported by The Wall Street Journal shows Apple continuing to pull away from Amazon, which tied Walmart for second place for all music sold in the U.S. earlier this year. Apple's share of the digital-download market from from 63.2 percent to 66.2 percent. Amazon's share climbed from 11 percent to 13.3 percent.



Record label distribution executives say the situation could be even worse for Amazon than reported. According to them, Amazon maintains just 6 to 10 percent of the market in any given week, while Apple hovers at closer to 90 percent.



Though Amazon's "daily deals," where it sells albums for as low as $3.99, have seen modest success, the online retail giant reportedly takes a loss on each "deal" sold. People familiar with the matter told the Journal that Amazon often still pays the full wholesale price, usually $7 to $8, for its daily bargains.



Pete Baltaxe, director of Amazon's digital music store, defended the daily deal as "a great way to get people excited about trying Amazon." "If you look across the board, we have been very competitive on price," said Baltaxe.



Amazon has tried the stategy of selling content at a loss before, specifically for the Kindle eReader. Earlier this year, reports emerged that Amazon takes as much as a $4.50 loss on certain e-book titles in order to maintain a dominant position in the market. Apple reportedly argued for higher prices for its iBookstore instead of Amazon's "bargain-basement prices."



NPD's report affirms Apple as the continued leader in music sales. In 2008, Apple surpassed Walmart to take the No. 1 spot among U.S. music retailers. Last year, iTunes represented more than a quarter of all U.S. music sales.
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Comments

  • Reply 1 of 33
    hill60hill60 Posts: 6,992member
    I almost bought an Album from Amazon because it was cheaper than iTunes, as I jumped through hoops in the sign up process and downloaded and installed their software then as I'm not in America, it wouldn't let me get it, switched me to Australia where the Album was the same price, so fired up iTunes, a couple of clicks later and was done.



    Deleted all their crap, hope they don't send me no spam.
  • Reply 2 of 33
    jmmxjmmx Posts: 341member
    Quote:
    Originally Posted by hill60 View Post


    I almost bought an Album from Amazon because it was cheaper than iTunes, as I jumped through hoops in the sign up process and downloaded and installed their software then as I'm not in America, it wouldn't let me get it, switched me to Australia where the Album was the same price, so fired up iTunes, a couple of clicks later and was done.



    Deleted all their crap, hope they don't send me no spam.



    Don't worry about spam. Amazon does not do that.. I have been buying from them for some time with no serious issue. Bought everything from Books to CDs to camera equipment. I even bought a couple of books while in Spain. (Though I might have had them sent to my brother who forwarded them on.)
  • Reply 3 of 33
    So a difference of 1% constitutes a "just." This site is hilarious sometimes.
  • Reply 4 of 33
    addaboxaddabox Posts: 12,664member
    Quote:
    Originally Posted by redbarchetta View Post


    So a difference of 1% constitutes a "just." This site is hilarious sometimes.



    Going from 11% to 13 vs. 63% to 66% qualifies for a "just", IMO, particularly given the article's explicit context of Amazon's strenuous efforts to drive market share by selling below cost.
  • Reply 5 of 33
    Quote:
    Originally Posted by addabox View Post


    Going from 11% to 13 vs. 63% to 66% qualifies for a "just."



    Right, a 1% difference. I disagree.



    Quote:
    Originally Posted by addabox View Post


    Particularly given the article's explicit context of Amazon's strenuous efforts to drive market share by selling below cost



    Strenuous efforts? What was "strenuous" about them?
  • Reply 6 of 33
    matrix07matrix07 Posts: 1,993member
    I love Amazon for DVD and Bluray and hope Apple would adopt Amazon policy by accepting foreign VISA credit card in the US store.
  • Reply 7 of 33
    Quote:
    Originally Posted by addabox View Post


    Going from 11% to 13 vs. 63% to 66% qualifies for a "just", IMO, particularly given the article's explicit context of Amazon's strenuous efforts to drive market share by selling below cost.



    In relative terms, going from 11% market share to 13% market share is actually an 18% growth (13 is 18% higher than 11). 63% to 66% is a 4% growth. Of course, I'm talking about relative to where they were, but what's important here is Amazon's market share is growing relatively faster than Apple's. Not that it matters so much. Everybody is jumping all over Amazon taking a loss on daily deals, as though it's awful, but it makes for cheaper products for us, so what's the deal. Loss leaders are a standard American marketing tactic, and I can't see why it's being spun so negatively here. Don't you all think Apple pays huge money (and takes something of a loss) on their "iTunes exclusives"? They maybe pay Timberlake $1 million for an outtake or Cher $1 million for behind the scenes footage of a facelift, but do they really earn an extra million selling the album? No... but it generates a lot of site traffic.



    What I'm really hoping for is that Apple's market share gets high enough that it is deemed a monopoly my the EU, so that the iPod/iTunes client/iTunes store/Ping/Genius system gets broken up into independent units. I'd love for a better client to emerge, but that won't happen as long as Apple can (basically) require iTunes for full iPhone functionality. iTunes is just way too slow, but Apple has no incentive to make it better, so they just keep adding crap to it which in turn makes it slower. I'd also like Ping, the iTunes store and the Genius removed from iTunes and instead be plugins. I know you can "uncheck" Ping and the Genius, but they're still there, taking up space, and sitting in the code.
  • Reply 8 of 33
    Oh I wish for the day when content licensing is universal around the world so I can enjoy music from various countries that are amazingly not being released in iTunes US, despite those music being available at the iTunes store for those respective countries.
  • Reply 9 of 33
    addaboxaddabox Posts: 12,664member
    Quote:
    Originally Posted by Superbass View Post


    In relative terms, going from 11% market share to 13% market share is actually an 18% growth (13 is 18% higher than 11). 63% to 66% is a 4% growth. Of course, I'm talking about relative to where they were, but what's important here is Amazon's market share is growing relatively faster than Apple's. Not that it matters so much. Everybody is jumping all over Amazon taking a loss on daily deals, as though it's awful, but it makes for cheaper products for us, so what's the deal. Loss leaders are a standard American marketing tactic, and I can't see why it's being spun so negatively here. Don't you all think Apple pays huge money (and takes something of a loss) on their "iTunes exclusives"? They maybe pay Timberlake $1 million for an outtake or Cher $1 million for behind the scenes footage of a facelift, but do they really earn an extra million selling the album? No... but it generates a lot of site traffic.



    I have no idea what you're talking about. Who is "jumping all over Amazon"? How is anything being made out to be "awful"? Where is anything being "spun negatively"? Do you have some kind of hair trigger Amazon defense mode?



    I mentioned that the context of the article makes clear that Amazon has raised their market share "just" 2 percentage points, despite taking a loss on a lot of product-- a basically unsustainable tactic designed to drive market share quickly (hence my use of the word "strenuously"). I didn't characterize the tactic as good or bad or anything, just that I kinda agree with the article that 2 points probably isn't worth it.



    Which makes your dark musings on Apple's expenditures sort of beside the point. Maybe they do. Maybe they spend ungodly amounts of money behind the scenes. Given their enormous success in the market, however, you'd have to say it was money well spend. It doesn't appear we can say the same about Amazon.





    Quote:

    What I'm really hoping for is that Apple's market share gets high enough that it is deemed a monopoly my the EU, so that the iPod/iTunes client/iTunes store/Ping/Genius system gets broken up into independent units. I'd love for a better client to emerge, but that won't happen as long as Apple can (basically) require iTunes for full iPhone functionality. iTunes is just way too slow, but Apple has no incentive to make it better, so they just keep adding crap to it which in turn makes it slower. I'd also like Ping, the iTunes store and the Genius removed from iTunes and instead be plugins. I know you can "uncheck" Ping and the Genius, but they're still there, taking up space, and sitting in the code.



    If you're worried about features that don't intrude on your experience "taking up space, sitting in the code" you may be insane.
  • Reply 10 of 33
    MacProMacPro Posts: 19,379member
    Partial quote:



    Quote:
    Originally Posted by addabox View Post




    If you're worried about features that don't intrude on your experience "taking up space, sitting in the code" you may be insane.



    Great on the spot psychoanalysis.
  • Reply 11 of 33
    MacProMacPro Posts: 19,379member
    Quote:
    Originally Posted by pika2000 View Post


    Oh I wish for the day when content licensing is universal around the world so I can enjoy music from various countries that are amazingly not being released in iTunes US, despite those music being available at the iTunes store for those respective countries.



    That will happen after World Peace and both sides of the US Congress sit down holding hands and sing Kumbaya (in that order).\
  • Reply 12 of 33
    Quote:
    Originally Posted by digitalclips View Post


    Partial quote:







    Great on the spot psychoanalysis.



    I'll second that great comeback.



    I can't believe people are out trolling a story that clearly establishes Amazon has to take losses on special deals and still sits at 13%, while Apple profits and is now over 66%.



    These guys are just anti-Apple trolls.



    Eat those figures, boys.
  • Reply 13 of 33
    Quote:
    Originally Posted by JakeBarnes View Post


    I can't believe people are out trolling a story that clearly establishes Amazon has to take losses on special deals and still sits at 13%, while Apple profits and is now over 66%.



    Where is it "clearly established" that Amazon takes a loss? The line that states "the online retail giant reportedly takes a loss on each "deal" sold" ? So that clearly makes it true?



    Reportedly Apple is releasing a Verizon-compatible iPhone early next year. Clearly that is true as well.



    And this article does attempt to diminish Amazon's success in the music download market. Apple's iTunes is clearly the Goliath in that market so the fact that Amazon continues to grow is an impressive achievement. I love Amazon's mp3 Deal of the Day. I've gotten some great music at great prices. And it's gotten me interested in new bands which has also led to me buying even more music.



    Since I have no horse in the race so to speak (don't own stock in either Apple or Amazon, don't know anyone employed by either company), it really doesn't matter to me whether they are losing money or not. I'm pretty sure Apple is losing money on The Beatles since there's no way they were given exclusive digital sales without forking out some amount of money in the process.
  • Reply 14 of 33
    The author of this article clearly doesn't understand statistical analytics, as they apply to markets.



    a 63% to 66% market share is 3% gain, but "JUST" a 4.7% improvement. (3 / 63 = 4.7)



    While a 14% to 16% share is a 2% market gain, but is a 14.29% improvement. (2 / 14 = 14.29)



    As an investor I'd MUCH rather have those that improve by 14.29% than 4.7%. Investors make money on relative market share gains, not on whole market share gains.



    For example, If I invest in Apple, and its iTunes market share gain goes from 63% to 66%, that gain is very small compared to its current revenue, so its stock value won't be highly affected. But, if I invest in any competitor who has a much smaller starting market share, they're going to experience a much more significant revenue increase even considering slightly smaller gains. This is why investors take big risk on startups and market under-dogs.
  • Reply 15 of 33
    Or did ai want to say "download"?
  • Reply 16 of 33
    MacProMacPro Posts: 19,379member
    Quote:
    Originally Posted by Hauerg View Post


    <What exactly is the analog music market theses days?> Or did ai want to say "download"?







    The only analog audio equipment I have left are my ears!
  • Reply 17 of 33
    Quote:
    Originally Posted by pika2000 View Post


    Oh I wish for the day when content licensing is universal around the world so I can enjoy music from various countries that are amazingly not being released in iTunes US, despite those music being available at the iTunes store for those respective countries.



    Agreed, this practice drives me bleedin' crazy. I have seriously considered some proxy services just so I can purchase music hassle-free.
  • Reply 18 of 33
    66%! i always thought Apples market share was nearer 88%. Still impressive non-the-less.
  • Reply 19 of 33
    Interestingly, people still pay the higher price for music even if Amazon is available. I guess iTunes is just too convenient... and those iTunes gift cards don't help Amazon either Actually, I didn't know that Amazon did daily "deals". I'm going to check them out now
  • Reply 20 of 33
    Quote:
    Originally Posted by addabox View Post


    Do you have some kind of hair trigger Amazon defense mode?



    The irony.
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