Amazon expanding digital music sales without eating at iTunes
Much of Amazon's early success in digital music sales has come by way of customers who have never tried Apple Inc.'s iTunes Store, a sign of broader growth potential within the music download business.
NPD, one of the leading market research firms, said in a report Tuesday that just 10 percent of Amazon MP3 customers surveyed in February indicated that they had previously purchased music through iTunes.
"The fact that Amazon's early growth does not appear to be at the expense of Apple iTunes is a healthy indication that the digital music customer pool can expand into new consumer groups who have not yet joined the iTunes community," remarked analyst Russ Crupnick.
Though having launched just six months ago, Amazon MP3 recently leapfrogged Wal-mart to become the number two purveyor of a-la-carte music tracks downloads in the US, behind iTunes.
Among the service's selling points are DRM-free tracks from all the major recording labels, a higher bit rate for digital files, and a price-per-download that is often lower than iTunes.
Still, Amazon has quite a ways to go before catching iTunes. The Apple download service does approximately 10 times more business on a unit basis than Amazon MP3, but it's the differences in the consumer demographic profiles of the two stores that's signaling a broader landscape for digital music downloads, according to NPD.
The research firm's initial consumer surveys found that 64 percent of the Amazon MP3 unit sales were traced to males compared to 44 percent for iTunes. Amazon MP3 showed the most strength among young adults aged 18 to 25, but only 3 percent of its customers were teens aged 13 to 17.
In contrast, the iTunes Music store sold nearly a fifth (18 percent) of its music to teens and also sports a healthy franchise in gift cards among that same demographic, while Amazon has a relatively small base of teen CD buyers.
"While it's still very early in the game, there's no evidence that Apple customers are deserting iTunes for a new alternative, either because of price or DRM restrictions," Crupnick said. "Amazon may simply be opening new markets from their existing consumer base and introductory promotions."
NPD says its monthly consumer tracking measures unit sales of a-la-carte downloads from services like iTunes and Amazon MP3, but does not track subscription music downloads or revenue from eMusic and other subscription music services.
NPD, one of the leading market research firms, said in a report Tuesday that just 10 percent of Amazon MP3 customers surveyed in February indicated that they had previously purchased music through iTunes.
"The fact that Amazon's early growth does not appear to be at the expense of Apple iTunes is a healthy indication that the digital music customer pool can expand into new consumer groups who have not yet joined the iTunes community," remarked analyst Russ Crupnick.
Though having launched just six months ago, Amazon MP3 recently leapfrogged Wal-mart to become the number two purveyor of a-la-carte music tracks downloads in the US, behind iTunes.
Among the service's selling points are DRM-free tracks from all the major recording labels, a higher bit rate for digital files, and a price-per-download that is often lower than iTunes.
Still, Amazon has quite a ways to go before catching iTunes. The Apple download service does approximately 10 times more business on a unit basis than Amazon MP3, but it's the differences in the consumer demographic profiles of the two stores that's signaling a broader landscape for digital music downloads, according to NPD.
The research firm's initial consumer surveys found that 64 percent of the Amazon MP3 unit sales were traced to males compared to 44 percent for iTunes. Amazon MP3 showed the most strength among young adults aged 18 to 25, but only 3 percent of its customers were teens aged 13 to 17.
In contrast, the iTunes Music store sold nearly a fifth (18 percent) of its music to teens and also sports a healthy franchise in gift cards among that same demographic, while Amazon has a relatively small base of teen CD buyers.
"While it's still very early in the game, there's no evidence that Apple customers are deserting iTunes for a new alternative, either because of price or DRM restrictions," Crupnick said. "Amazon may simply be opening new markets from their existing consumer base and introductory promotions."
NPD says its monthly consumer tracking measures unit sales of a-la-carte downloads from services like iTunes and Amazon MP3, but does not track subscription music downloads or revenue from eMusic and other subscription music services.
Comments
If the can do this, I don't see why they don't. It would help to attract more of those "males", to whom higher bitrates are important.
I wonder if it's within Apple's power to release all of their music as 256KB/s, even though it's not within their power to release DRM-free music unless they've been contracted to do so.
From the way the articles have read over the years, it seems that Apple only has control of the pricing, not the bit rate or DRM. If they did, I too would have thought they would have upped the quality.
Though, if they do make 256Kbps the new minimum at the iTS, would they then have to half their iPod capacity listings or could they still say "x many songs at 128Kbps"?
I wonder how many of these Amazon customers also have an iDevice, which is Apple's bread and butter.
From the way the articles have read over the years, it seems that Apple only has control of the pricing, not the bit rate or DRM. If they did, I too would have thought they would have upped the quality.
Though, if they do make 256Kbps the new minimum at the iTS, would they then have to half their iPod capacity listings or could they still say "x many songs at 128Kbps"?
Bottom line: I believe a stronger, better Amazon e-music store is good for me as a consumer. Anyone else? Am I being blind to reasons we should root against them?
Apple has and will argue that 128Kbps AAC is comparable to 256Kbps MP3, therefore no need to up the quality of the songs or change the capacity rating of the iPods/iPhones. Whether is it true or not is a different story.
I don't recall reading Apple claiming that. AAC is a better codec that MP3, but there is no question that a 256Kbps MP3 contains more uncompressed data than a 128Kbps AAC file.
So Amazon is selling more music than eMusic? Really? Or, does the eMusic subscription model not count in NPD's data tracking methods?
If they use a subscription model, isn't that rental and not sales? If I don't get to keep the music after ending the subscription, that's not really buying it, is it?
So Amazon is selling more music than eMusic? Really? Or, does the eMusic subscription model not count in NPD's data tracking methods?
According to the article it doesn't appear that emusic is tracked.
I have an emusic account; so I purchase music downloads via iTunes; Amazon; and emusic.
...and I still purchase compact disc's (my preferred choice)!
I don't recall reading Apple claiming that. AAC is a better codec that MP3, but there is no question that a 256Kbps MP3 contains more uncompressed data than a 128Kbps AAC file.
I have used both services and both work well at integrating songs into iTunes library. I do think iTunes will be in trouble if they don't figured out how to negotiated DRM free content with the rest of the record labels.
Remember that it is a USA only service at the moment, so in the UK I will stick with iTunes.
Ian
Apple has and will argue that 128Kbps AAC is comparable to 256Kbps MP3, therefore no need to up the quality of the songs or change the capacity rating of the iPods/iPhones. Whether is it true or not is a different story.
Dude, if you think you would be able to tell the difference between a 128Kbps & 256Kbps MP3, check this site out & you will see how wrong you are http://mp3ornot.com/
Dude, if you think you would be able to tell the difference between a 128Kbps & 256Kbps MP3, check this site out & you will see how wrong you are http://mp3ornot.com/
cool, and if anyone can just wait a few years ... then they won't be able to
in fact aren't thier + tunes at something like 192Kbps AAC? At any rate when iTunes first started they used to claim that AAC was superior to MP3 and so it was higher quality at the same 128Kbps bit rate. Windows tried to make the same claim about WMA.
iTunes plus is 256 AAC, and AAC is superior to mp3 at the same bitrate. But that doesn't mean that AAC 128 is better than mp3 256.
Dude, if you think you would be able to tell the difference between a 128Kbps & 256Kbps MP3, check this site out & you will see how wrong you are http://mp3ornot.com/
Nice idea, but that's a terrible choice of clips to use for comparison - artifacts are most obvious with things like cymbals. The difference is minor in that case, but with lots of material it's extremely obvious.
Dude, if you think you would be able to tell the difference between a 128Kbps & 256Kbps MP3, check this site out & you will see how wrong you are http://mp3ornot.com/
iTunes plus is 256 AAC, and AAC is superior to mp3 at the same bitrate. But that doesn't mean that AAC 128 is better than mp3 256.
Nice idea, but that's a terrible choice of clips to use for comparison - artifacts are most obvious with things like cymbals. The difference is minor in that case, but with lots of material it's extremely obvious.
Thumbs up!
According to the article it doesn't appear that emusic is tracked.
I have an emusic account; so I purchase music downloads via iTunes; Amazon; and emusic.
...and I still purchase compact disc's (my preferred choice)!
Right on brother, freedom of choice is a beautiful thing. I do the same thing, iTunes (only if it's iTunes Plus), eMusic (for all things indie) and CD's (for when I love it so much I must have the physical disc). I'd love to purchase from Amazon too.. but Canada is always last on the list with these things it seems. Let's get it together Amazon! (Or Apple.. whoever does the whole DRM free thing here first is my horse to bet on).
Given the various environments I listen to music in, bit rate not as important to me. And I'm too short-sighted to care much about being locked-in to the Apple world of music. So it all comes down to ease of use and being a good experience for me right now. And Amazon's store, while technically very easy to use, is just not a very good customer experience. I won't bore anyone with details, since everyone has their own opinion if they've used it, but as a guy who spends his work-life measuring and improving customer experience, my list of things broken about the Amazon store is extrensive (yes, I do wish I could leave my work at work when I turn into a consumer, but alas...).
Bottom line: I believe a stronger, better Amazon e-music store is good for me as a consumer. Anyone else? Am I being blind to reasons we should root against them?
No I totally agree. Amazon has a pretty strong base service going.. if they get their act together and open internationally, they have a good chance of giving iTunes a real run for it's money. (And competition is always a good thing in my books.)
Jimzip
So Amazon is selling more music than eMusic? Really? Or, does the eMusic subscription model not count in NPD's data tracking methods?
I really don't know. It's not necessarily that hard, depending on whether you count tracks or money. One track at Amazon costs about 2.5x that of a track at eMusic. eMusic places restrictions though, you pretty much have to subscribe, you only get a certain number of tracks a month, they don't roll over if you don't use them all, and to get more tracks in a given month, you have to subscribe to a higher plan rather than just buy them outright. As such, I quit eMusic once I got what I wanted.
Apple really needs to get DRM free versions of the stuff Amazon has DRM free as well as the higher bitrate on everything.
When I buy music now, first I check it out on iTunes and play the sample there to find what I want. Then I check to see if it's DRM'd or not. If it has a DRM, then I go to Amazon to see if I can get it there.
I don't recall reading Apple claiming that. AAC is a better codec that MP3, but there is no question that a 256Kbps MP3 contains more uncompressed data than a 128Kbps AAC file.
That doesn't mean anything.
There is no "uncompressed data" in either AAC or MP3. Its all psychoacoustic encoding algorithms with lose lots of the original music. Its all a matter of which algorithm tricks you better into thinking you hear all the music. AAC is clearly much superior to MP3.