Thursday
May272010

iTunes: No. 1 With A Bullet On Music Sales Chart

May 26, 2010: This has as much to do with Kings of Leon and Jay-Z as it does with Jonas Brothers, Glee and Lady Gaga:  Apple’s iTunes store continues to lead all music retailers in total sales, with 28% of all music purchased by U.S. consumers,  and still dominates the digital-music download retail market with 70% of the digital music market last quarter. Behind iTunes in total sales was Amazon, which gained three percentage points to tie Wal-Mart for second position at 12% of music sales, according to market and research firm The NPD Group, Port Washington, NY.

The statistics come from  NPD’s consumer tracking of U.S. consumers, age 13 and older, who reported their purchases of physical product (CDs), digital music and wireless over-the-air (OTA) transactions , excluding ring tones. NPD’s combined music retailer ranking reflects combined sales of CDs and digital music downloads, where 12 digital music tracks are equivalent to one CD.

The iTunes total sales figure represents an increase of of 4 percentage points since Q1 2009. Sales of digital tracks and albums accounted for 40% of overall music market share in Q1 2010, which is a 5 percentage point gain since Q1 2009, according to NPD.

“Amazon’s growth reflects a stronger position in both the CD and digital formats,” Russ Crupnick, vp-industry analysis for the NPD Group, said in a statement. “This dual-pronged approach of selling both digital music and CDs helps attract the most valuable and committed music buyer who prefers access to both formats.”

According to NPD’s MusicWatch, when reviewing sales of digital music separately from CDs,  data showed that iTunes still dominates the digital-music download retail market with 70% of the digital music market last quarter. However, the figure "has remained essentially flat" since Q1 2009, growing just one percentage point to reach 70%.

"Unfortunately the decline in U.S. CD sales means that selection and merchandising of the physical CDs is suffering, which is one of the primary reasons consumers say they purchased CDs less frequently."

Concurrently, Amazon MP3 grew by 4 percentage points to reach 12% of market share in the digital music download category, while Amazon’s share of the CD market grew by 2 percentage points to 11%.

Wal-Mart led the U.S. in CD sales in Q1 2010 with 17% share of the CD retail market. Best Buy was second with 14%, followed by Amazon at 11%.

“Unfortunately the decline in U.S. CD sales means that selection and merchandising of the physical CDs is suffering, which is one of the primary reasons consumers say they purchased CDs less frequently,” said Crupnick. “Online shopping offers consumers who still want CDs more variety than they would get in a brick-and-mortar store; plus, recommendations, and other interactive features that raise the overall value proposition for music buyers.”

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