updated 09:40 am EST, Tue February 26, 2008
NPD on iTunes 2nd Place
In an environment where users are more likely to turn to piracy, Apple's iTunes Store has climbed to second place among all legal US music stores and is second only to Wal-Mart, according to a new study by The NPD Group. The research firm notes that about 29 million users, or 10 percent of all people acquiring music in the US, turned to paid download services throughout the course of 2007 and more often shopped at iTunes than through any other service. The total figure represented a jump of about five million versus 2006 and saw most sales go to buyers between 36 and 50 years old. This same segment largely drove sales of portable media players like the iPod.
Companies such as Apple should target that older population if they hope to continue their success, NPD says, by launching more back-catalog titles or bundles, such as albums that include videos.
This success, however, comes amidst falling sales among younger buyers. Analysts note that while the amount of music added to listeners' collections climbed by 6 percent in 2007, the overall plunge in CD sales actually dropped the amount of actual spending by 10 percent, with most spending just $40 on legal music for the entire year. As many as one million people stopped buying CDs altogether in the last year, with nearly half of all teenagers -- 48 percent -- never having bought their music in the physical medium.
Although the gradual decline in CD sales is cited as the main factor, NPD notes that piracy was key to the decline. As much as 19 percent of all American Internet users engaged in some form of peer-to-peer sharing, most (though not all) of which often revolves around trading bootleg music. Where 48 percent of music was paid for in 2006, only 42 percent was legally purchased the following year.
The news comes as the IFPI and other pro-industry organizations have called on Internet providers to filter out illegal material on the server level, which would prevent many peer-to-peer transfers and other unauthorized downloads from taking place.