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iTunes now responsible for 25% of all U.S. music sales

Sam Symons   on 18 August 2009 - 21:55 · 38 comments & 3791 views

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Apple's iTunes Store has seen some pretty good growth in the last couple of years; it's currently the most popular online music store, and that apparently isn't all, according to MarketWatch. Just recently, iTunes managed to reach 25% (rising from 21% in 2008 and 14% the year before) of all music sales in the United States, meaning that it is now number one in both categories, be it digital or physical.

Let's lay down some statistics here, straight from The NPD Group's report (keeping in mind they're all related to the United States only). Physical sales in the first half of this year (CDs, etc) accounted for 65% of all music sold, whereas digital hit 35% (up from 30% last year, and 20% in 2007). Russ Crupnick, who is vice president of entertainment industry analysis with The NPD Group, commented on this, saying, "But with digital music sales growing at 15 to 20 percent, and CDs falling by an equal proportion, digital music sales will nearly equal CD sales by the end of 2010."

iTunes is now at 69% of all digital sales in the U.S., with the closest rival being AmazonMP3, at 8 percent. In terms of physical sales, Walmart leads the way with 20 percent of sales, tailed by Best Buy at 16 percent, with Amazon and Target both at 10 percent each. Russ Crupnick, an entertainment industry analyst for The NPD Group, said, "The growth of legal digital music downloads, and Apple's success in holding that market, has increased iTunes's overall strength in the retail music category." He added, "But the importance of the big box retailers shouldn't be dismissed, as long as the majority of music consumers continue to buy CDs."

The future for physical media sales is looking a tad bleak... let us know in the comments, Neowin; do you prefer to buy digitally, or are you a firm believer in having something you can hold in your hand?

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(1 reply) #1 Frank Fontaine on 18 Aug 2009 - 21:58
I'm actually surprised the figure isn't higher than that
#1.1 M_Lyons10 on 18 Aug 2009 - 22:38
Frank Fontaine said,
I'm actually surprised the figure isn't higher than that


So am I. It really doesn't make sense to buy a whole album, when you can buy the one or two songs that were actually good instead. LOL
#2 dagrimdialer619 on 18 Aug 2009 - 22:03
digital.
(11 replies) #3 artfuldodga on 18 Aug 2009 - 22:14
great is Neowin going to turn into a market share argument because of these Apple lovers? find some interesting news to post, i prefer not using ****ty iTunes software on my computer i know that much, software that doesn't require 80mb for a security update, garbage
#3.1 HolyOne on 18 Aug 2009 - 22:25
You have a little foam by your mouth.. right.. there!

Seriously - relax man. I realize iTunes is hardly the greatest software out there, but in reality there is no other software like it.* Oh sure, you have the audio players - Foobar and others - but iTunes is far more than a media player. It's an entire digital distribution platform, and it does that very well. A massive collection of music, video, and movies - a collection that continues to expand. I can open up iTunes on my iPod and download songs directly to it, or I can go onto my computer and download a movie from iTunes and then add it to my iPod.

* I realize the Zune software would offer similar functionality, but I've never used the Zune software to pass judgment on it.
#3.2 artfuldodga on 18 Aug 2009 - 22:37
i wouldn't mind iTunes, but its the honest truth, the software on Windows at least has and still is garbage, nobody can debate that
#3.3 Jugalator on 18 Aug 2009 - 22:43
artfuldodga said,
great is Neowin going to turn into a market share argument because of these Apple lovers? find some interesting news to post, i prefer not using ****ty iTunes software on my computer i know that much, software that doesn't require 80mb for a security update, garbage

wtf...

These news aren't just being covered by Neowin to promote Apple (which sounds like a ridiculous thought by itself), this is mainstream IT news today, also over at e.g. Ars, which is pretty PC heavy. Go back to drooling at your Windows 7 superbar if you have trouble with Neowin covering the IT industry in general, not just your little bubble.
#3.4 HolyOne on 18 Aug 2009 - 23:11
artfuldodga said,
i wouldn't mind iTunes, but its the honest truth, the software on Windows at least has and still is garbage, nobody can debate that


I wasn't disagreeing that - performance wise - it's abysmal on windows. I can't comment on how it performs on OS X as I've only ever used it on XP and now 7.
#3.5 Electric Jolt on 18 Aug 2009 - 23:12
Go try out the Zune software with a free 14-day Zune pass. I did and it's great, can't wait to use it for my soon-to-be-in-my-hands Zune HD.
#3.6 Sam Symons on 18 Aug 2009 - 23:14
HolyOne said,
I wasn't disagreeing that - performance wise - it's abysmal on windows. I can't comment on how it performs on OS X as I've only ever used it on XP and now 7.

Yeap, it most definitely is ghastly on Windows. On OS X it's great, works wonderfully, but that's a given.
#3.7 Pam14160 on 18 Aug 2009 - 23:31
I started using iTunes in 2001 on a 17" iMac, and have not used anything else since. At present it is loaded on my Power Mac G5, and my Win 7 machine. And, to date have had no problems on either platform. If you don't like it then fine; there are some excellent media players out there in the wilderness fine one that pleases you, but don't bitch about something because you it doesn't fit your needs.
#3.8 Frank Fontaine on 19 Aug 2009 - 00:00
I am not a fan in the least of iTunes on Windows, but it is an excellent digital distribution platform, and now the tracks are all offered DRM free, you can purchase content from iTunes and play it in WMP, WMC, and most other players.
#3.9 Neoauld on 19 Aug 2009 - 00:09
i think itunes itself is garbage, at least on windows
but the store is good none the less
need to get rid of DRM though
#3.10 Frank Fontaine on 19 Aug 2009 - 02:25
Neoauld said,
i think itunes itself is garbage, at least on windows
but the store is good none the less
need to get rid of DRM though


The vast majority of the iTunes library is now DRM free, at least in music terms. Still have DRM on the video content though
#3.11 bob_c_b on 19 Aug 2009 - 11:04
artfuldodga said,
great is Neowin going to turn into a market share argument because of these Apple lovers? find some interesting news to post, i prefer not using ****ty iTunes software on my computer i know that much, software that doesn't require 80mb for a security update, garbage


Try to stay on topic, as a digital distribution platform iTunes currently has no peer. Amazon has a comparable selection but an awful interface. Emusic, the Zune store front and all the others are sorely lacking in content to even be contenders.
(3 replies) #4 chadlachlanross on 18 Aug 2009 - 22:15
Digital and DRM free.
#4.1 Draje on 18 Aug 2009 - 22:20
Don't forget lossy.
#4.2 Tekkerson on 19 Aug 2009 - 02:13
And that's why I'll stick to CD any day.

Edit: or and of course a wav/flac file =D
#4.3 3rd impact on 20 Aug 2009 - 06:11
Draje said,
Don't forget lossy.


they wouldn't know anything about lossy XD. ignorance is bliss.
(1 reply) #5 pupdawg21 on 18 Aug 2009 - 22:22
I'm actually not too surprised by those figures. When you take into consideration some artists don't release physically at all anymore. I'm also not surprised that AmazonMP3 is a strong #2 in the digital realm. I wonder what percentage has the Zune Marketplace obtained? The Zune Marketplace numbers are probably pretty close to whatever percentage they have of the MP3 player market probably less than 5%. Even though now pretty much all of the stores are selling MP3s now so you can play the songs purchased on pretty much any player but it's the integration that is winning and growing the iTunes store. Also, a lot of music is released only on iTunes and only hits AmazonMP3, Napster, Zune Marketplace, and other stores much later if at all. All of these factors continue to grow the iTunes marketplace and probably will continue to grow for the foreseeable future. What I do see is a slight slow down in iPod sales in favor of the Zune HD. This predicted drop in sales though might be short lived, the Zune HD looks to have a superior product but people are so locked in and familiar with iTunes that the main value that Zune offers over iTunes is only the Subscription service which a lot of people still are not entirely sold on. I was entirely sold on the subscription service before Yahoo! music called it quits. I had an incredible 2 years subscription deal with them that I know probably was not sustainable for them and probably why they ultimately had to shut down. (Licensing fees for the music streams far outweighed their income.) They were priced far lower than Microsoft's Zune Marketplace subscription service.

Napster's partnership with Best Buy doesn't seem to have helped them much at least not as far as music sales, their subscription revenue maybe up. I haven't really heard much in this regard either way.
#5.1 Halfalive on 19 Aug 2009 - 04:44
I'm not surprise that Amazon Mp3 is #2 either, that's what I use. I love the 5 dollar albums... I use that to buy singles and some albums, but I also love the old school CDs still...
(3 replies) #6 cleverclogs on 18 Aug 2009 - 22:37
Please for the love of god don't give up making music available on a physical medium. CDs are quite lovely to open up, read the insert while holding it in my hands.
#6.1 hotdog963al on 18 Aug 2009 - 22:50
Vinyls are making a come back! I'm ordering so many at the moment, most of which come with CDs and/or free downloads (in various formats/quality).
#6.2 tele-fragd on 19 Aug 2009 - 00:11
cleverclogs said,
Please for the love of god don't give up making music available on a physical medium. CDs are quite lovely to open up, read the insert while holding it in my hands.

Definitely in terms of sound quality too. Even if iTunes offered lossless downloads, I'd still prefer to have a tangible product.
#6.3 cakesy on 19 Aug 2009 - 03:37
cleverclogs said,
Please for the love of god don't give up making music available on a physical medium. CDs are quite lovely to open up, read the insert while holding it in my hands.

People said the same thing about vinyl, and vinyl covers.
(1 reply) #7 pupdawg21 on 18 Aug 2009 - 23:02
Yeah vinyls are actually trying to make a come back. I don't see physical disks going away because physical does still definitely sound better (with good equipment and when the recording is good). Some recordings simply won't sound any better when it's compressed mp3 vs what the uncompressed physical cd version sounds like. And of course people like the extra little nick nacks that you get when you buy the physical disc. A lot of artists are bundling extra things when you buy the physical and some offer a free digital copy with it when you get in on some of their pre-ordering promotions. Physical is down a bit but it's no where near out. There are some that will buy the physical no matter what and make their own digital copy if they ever feel the need. That way they can create as high of quality of file as they want without being restricted to the 192/256kbit of most legal download sites. The majority of the songs available are now DRM free so that's no longer a valid argument against digital music.
#7.1 wakers01 on 19 Aug 2009 - 19:43
I think that as disk space increases on small, flash based devices (256 GB thumb drive anyone) and broadband speeds increase(I know Verizon's FioS service is like 20 down, 5 up), we will probably see less of a need for compression technologies, so the quality can begin to approach or exceed CD quality audio and we could see physical mediums start to disappear. Just a theory though.
(1 reply) #8 +micwa on 18 Aug 2009 - 23:58
The other 75%? P2P networks. lol
#8.1 Memnochxx on 19 Aug 2009 - 00:39
People pay for p2p?
(5 replies) #9 TheChucklesStart on 19 Aug 2009 - 01:00
I wonder how they count subscription models into this plan. According to someone from microsoft (I think it was their zune insider which anything but ipod got me to listen too, blech), but the average ipod user only buys like 10 mp3's every 6 months.

Considering that Napster gives away 5 and zune pass gives away 10 every month (with subscription to the rental service). How are these stacking up? or are they considered rental bonuses and thus don't get mixed in.
#9.1 cakesy on 19 Aug 2009 - 03:39
Well, if anyone actually used Napster or zune pass, they would probably start reporting it. Maybe more people will pick it up after the new Zune (not calling it the zune hd, because it is clearly not HD).
#9.2 bob_c_b on 19 Aug 2009 - 11:17
TheChucklesStart said,
I wonder how they count subscription models into this plan. According to someone from microsoft (I think it was their zune insider which anything but ipod got me to listen too, blech), but the average ipod user only buys like 10 mp3's every 6 months.

Considering that Napster gives away 5 and zune pass gives away 10 every month (with subscription to the rental service). How are these stacking up? or are they considered rental bonuses and thus don't get mixed in.


Considering iTunes crossed the 8 billion songs sold mark in July, and the last rough lifetime sales figure of iPods sold (not sure if this includes the iPhone, but for sake or argument we'll say it does) is 175 million, that comes out to about 45 songs purchased per iPod. Considering not every single person buys from iTMS just because they own an iPod, and many people have owned multiple generations of iPods, that figure doesn't sound all that off. I personally have owned several models of iPod, as has my wife and we own several hundred songs from iTMS, as well as Amazon MP3, but it's clear we are not the norm.

I do believe those give away songs count as sales (the way modern accounting works someone is paying for those "free" songs), but since Napster and the Zune store are overall failures I don't think they add up to much. I just sold my Zune 16GB recently and I can say I never used the Zune store, was buying from Amazon MP3 at that point.
#9.3 wakers01 on 19 Aug 2009 - 19:26
cakesy said,
Well, if anyone actually used Napster or zune pass, they would probably start reporting it. Maybe more people will pick it up after the new Zune (not calling it the zune hd, because it is clearly not HD).


I have a Zune pass and love it. And what do you mean about the new HD "clearly" not being HD???
#9.4 wakers01 on 19 Aug 2009 - 19:30
bob_c_b said,
I just sold my Zune 16GB recently and I can say I never used the Zune store, was buying from Amazon MP3 at that point.


If you're buying tracks at all you are kind of missing the point of the Zune pass.
#9.5 cakesy on 19 Aug 2009 - 22:29
wakers01 said,
I have a Zune pass and love it. And what do you mean about the new HD "clearly" not being HD???

Exactly what it says. It does not display HD content on the device, so why call it HD? The xbox 360 is the Xbox HD, although it would deserve the title more than the zune.
#10 +warwagon on 19 Aug 2009 - 16:17
Well I bought my very first song ever online last night on Amazon. I got an mp3 of the Karaoke version of One more minute by Weird Al. It was only like $.089
#11 Magallanes on 20 Aug 2009 - 00:45
but, how much the US music market is in comparison with the rest of the world?
#12 daniel_rh on 20 Aug 2009 - 01:04
Hmm, I thought it was 50% or something

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