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Sun, Oct 12, 2008 - 01:27 AM EDT — AAPL: 96.80 (+8.06, +9.08%) | NASDAQ: 1649.51 (+4.39, +0.27%)

NPD: Apple’s iTunes Store unaffected by Amazon’s growing MP3 sales

Tuesday, April 15, 2008 - 11:55 AM EDT

"Amazon.com's MP3 service is growing but not at the expense of Apple's iTunes, according to a report issued Tuesday by market researcher NPD Group," Greg Sandoval reports for CNET.

"About 10 percent of the people who shopped at AmazonMP3 in February were previous Apple shoppers, NPD said," Sandoval reports.

"Apple's iTunes remains the No.1 digital music store. AmazonMP3, which launched last September, slipped past Wal-Mart to take over the No.2 spot in February when comparing the individual music tracks downloaded by consumers in the U.S., according to NPD," Sandoval reports.

MacDailyNews Note: In terms of all music sales in the U.S. — not just online downloads, but including brick and mortar retail stores as well — NPD currently measures Apple's total share of the music business at #1, with 19%. Wal-Mart is #2 (15%), Best Buy is #3 (13%), followed by Amazon and Target (6% each), FYE/Coconuts (4%), Borders (3%), Circuit City (3%), and Barnes & Noble (2%). Total physical music sales accounted for 70.9% and paid downloads comprised 29.1% of all the music sold in the U.S. in January. Apple's iTunes Store currently offers over 6 million songs, has over 50 million customers, and has sold over 4 billion songs. Apple has approximately 80% market share of digital downloads.

"But Amazon has a long way to go, says NPD. Sales at iTunes are more than 10 times larger than Amazon's, the research firm said," Sandoval reports.

Full article here.

Katie Marsal reports for AppleInsider, "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," Marsal reports.

"'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,' NPD analyst Russ Crupnick said. 'Amazon may simply be opening new markets from their existing consumer base and introductory promotions,'" Marsal reports.

"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," Marsal reports.

Full article here.

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Apr 15, 08 - 12:03 pm Comment from: Ray

Until there are no more non-download options for buying music...the market for downloadable music is not saturated. Until that happens there can still be competitors that do not affect each other's sales.

Just my $0.02

Apr 15, 08 - 12:16 pm Comment from: HotinPlaya

Its B*ll *hit

They give DRM free, 256k to Amazon, but not Apple, can't they do something about it?

Apr 15, 08 - 12:19 pm Comment from: whoitis

I've been a loyal Apple supporter for many years now (System 7 days) and I've started buying my music from amazon. DRM and 256k. I don't understand why Apple can't make this happen for iTunes.

Apr 15, 08 - 12:23 pm Comment from: Fred Mertz

whoitis,

Try the "Related articles" provided by MDN above. They're your friend.

It's not Apple's fault, it's the music labels who are trying to break iTunes' dominance.

Apr 15, 08 - 12:24 pm Comment from: HotinPlaya

@whoitis

It's not Apple

Its the big 4, trying to undermine iTunes

Apr 15, 08 - 12:33 pm Comment from: iamdj

Cannot apple sue the other record companies for collusion?

I think Apple has a case here.

Apr 15, 08 - 12:41 pm Comment from: Raymond in DC

I tried Amazon's music service a few months ago - lost my $.89 when the download failed.

Apr 15, 08 - 12:47 pm Comment from: Cowboy

I would agree that they have a case (collusion) if the record companies don't give them the same deal as Amazon when new contracts are negotiated.

I would assume that they are still working under old contracts.

Apr 15, 08 - 12:49 pm Comment from: MacSheikh

@ iamdj

"Cannot apple sue the other record companies for collusion?"

Even if Apple can sue those goons, i doubt they'll take that step lightly and without trying other alternative ways first. It's just not a very good move yet imho. Maybe Apple feel they have more important things to do first. Besides, even if people buy the non-DRM MP3s from Amazon or whoever, they can still play them on their iPods.

Apr 15, 08 - 12:49 pm Comment from: LordRobin

Its the big 4, trying to undermine iTunes

And it's not working.

Cannot apple sue the other record companies for collusion?

I would more expect Apple to play hardball during the next round of negotiations and demand access to the un-DRM'd tracks. The market has made it pretty clear where the power lies. With iTunes accounting for at least 25% of the music companies' revenues, they can't afford to walk away.

------RM

Apr 15, 08 - 12:52 pm Comment from: Sheep Register

The front end of the deal is 256, DRM free.

The back end of the deal is variable pricing that the record companies set.

Apple has rejected the entire deal due to what's at the back end.

Amazon looks good by showcasing the front end.

As Dorothy learned, always look behind the curtain.

Apr 15, 08 - 12:54 pm Comment from: Ray: It's 2¢

2¢ is all your comments are worth.
Apparently.

Apr 15, 08 - 02:01 pm Comment from: canuck

note: Amazon MP3 is currently ONLY available in the U.S.

so even if I wanted to buy from Amazon instead of iTunes (in Canada), I couldn't

Apr 15, 08 - 02:13 pm Comment from: R5D4

Amazon is 256 MP3, not higher quality ACC, like iTunes plus. But Apple should get to a point where all their downloads are DRM-free and at least 256 ACC or higher if they want to make the purchase of CDs obsolete in terms of both convenience and sound quality.

Apr 15, 08 - 04:47 pm Comment from: Derek Currie

HotinPlaya sez: "They give DRM free, 256k to Amazon, but not Apple, can't they do something about it?"

Actually, there are a lot of DRM-FREE (digital rights manglement) tunes available at the iTunes store. EMI has lead the way. Apple is also offering higher rez tunes in a lot of cases without charging extra for them, which I think is terrific. (I don't like 128 bit AAC, sorry).

As for the other corps, my understanding is either that Apple has to wait until their contract renewal comes around, OR some of the corps want to give away tune security to Amazon so they can partake of non-consensual reproductive congress with Apple. Clearly the latter strategy is not working.

Apr 15, 08 - 07:45 pm Comment from: scut

Ummm...iTunes Plus is 99 cents and DRM free at 256K. See below from Apple's suport site.

What is iTunes Plus?

iTunes Plus refers to songs and music videos available in our highest-quality 256 kbps AAC encoding (twice the current bit rate of 128 kbps), and without digital rights management (DRM). There are no burn limits and iTunes Plus music will play on all iPods, Mac or Windows computers, Apple TVs, and many other digital music players.

iTunes DRM-protected music includes audio with a bit rate of 128 kbps and allows users to transfer songs and videos to up to five computers, burn seven copies of the same playlist to CD, and sync to an unlimited number of iPods.

How much does iTunes Plus music cost?

iTunes Plus songs, music videos, and albums are available at the same price as DRM-protected versions content.

Apr 15, 08 - 08:28 pm Comment from: Connor MacBook

Why do places like Amazon continue plumping for MP3 when AAC is non-proprietary and better quality?

Apr 15, 08 - 08:57 pm Comment from: Goople

I think a 10 percent defection rate is pretty high.

Apr 16, 08 - 08:16 am Comment from: Question

MDN quote

"the trend is what's important not the absolute numbers"

So is Amazon gaining 6% of the market in a couple of months not really really impressive?

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Sun, Oct 12, 2008 - 01:27 AM EDT — AAPL: 96.80 (+8.06, +9.08%) | NASDAQ: 1649.51 (+4.39, +0.27%)

NPD: Apple’s iTunes Store unaffected by Amazon’s growing MP3 sales

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