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NPD: iTunes 2nd-largest music store in US

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.



By Electronista Staff
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  1. horvatic

    Fresh-Faced Recruit

    Joined: Apr 2002

    0

    Wal-mart closed its onlin

    Wal-mart closed its online store so that makes iTunes #1.

  1. gambit-7

    Fresh-Faced Recruit

    Joined: Feb 2001

    0

    iTunes is #2!

    Everybody PANIC!!!! Sell the stock!!! Apple's success will be their DEMISE!!!!

  1. mgpalma

    Fresh-Faced Recruit

    Joined: Sep 2000

    0

    re:Wal-mart-iTunes is # 2

    The article states "Apple's iTunes Store has climbed to second place among all legal US music stores" this includes brick-and-mortar stores like Wal-mart, et-al. iTunes is the No. 1 ONLINE store

  1. Deal

    Mac Enthusiast

    Joined: Apr 2001

    0

    Duh

    Of course younger people buy less music. Generally, they have less money and more time on their hands. I would say that of the people who download music (or copy it) illegally, the vast majority are under 20 and the rest trickle up to about 25.

    Once they get out of college and spending a buck on a song instead of getting it deceptively is easier and in my opinion cheaper.

    So many home computers I've worked on (where teenagers are present) have had malware issues due to Limewire. Not to mention how many ipod issues I've seen when people have bad files downloaded from bad sources.

    Live and learn kids.

  1. MatildeMatilde

    Fresh-Faced Recruit

    Joined: Feb 2008

    0

    decline in quality?

    I wonder if the music industry will ever stop to consider that perhaps people are buying less music because there seems to be less worth buying out there.

  1. vasic

    Fresh-Faced Recruit

    Joined: May 2005

    0

    Less than before

    Younger people are buying less music than in previous year(s). The labels are in fact failing to generate content that is attractive to the younger audiences.

    It is very difficult to realise that iTunes store sells more music than Target, or Amazon, not to mention (now defunct) Tower Music or other specialised record store chains. The amazing part is that Target (the No. 3, behind Apple) sells physical CDs, which were, until four years ago, the ONLY way you could buy music (not counting vinyl or other obsolete media). One out of every ten bucks is spent online. This also means that (more than) one in ten bucks of the record labels' profits come from Apple. Since the trend is obvious, and pace is accelerated, labels are desperate for some serious competition to Apple, otherwise, they'll lose all control over their products and customers will win.

    It is amazing how quickly this had happened, and it will be even more amazing to watch how this struggle goes down in the coming years.

  1. jamiec

    Fresh-Faced Recruit

    Joined: Aug 2006

    0

    Treat 'em like thieves...

    ...and they'll act that way.

    I don't buy the "quality" argument. Albums don't disappear after a year on sale -- each year only adds to the choices. The young people I know listen to lots of music, and not just the stuff recorded this year, or last year, or even during their lifetime.

    The problem is piracy -- or more specifically, the music industry's heavy-handed reaction to piracy. When legitimate, paying users are forced to submit to restrictive DRM, it makes being an illegitimate user look like a much more attractive option.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Re: less than before

    It is very difficult to realise that iTunes store sells more music than Target,... One out of every ten bucks is spent online. ... It is amazing how quickly this had happened, and it will be even more amazing to watch how this struggle goes down in the coming years.

    Keep in mind that people had been downloading music well before the iTMS came along. It's actually the concept of 'buying' digital music that is new, but many people had already gone digital with their music (be it from 'illegal' downloads or from ripping CDs).

    This also means that (more than) one in ten bucks of the record labels' profits come from Apple. Since the trend is obvious, and pace is accelerated, labels are desperate for some serious competition to Apple, otherwise, they'll lose all control over their products and customers will win.

    You should be desparate for competition as well, as competition drives innovation, lower price, and more control for consumers. Customers don't win from having a single source of content (otherwise people would've been happy with MS, AT&T, Comcast, etc).

  1. Ridley

    Fresh-Faced Recruit

    Joined: May 2007

    0

    Re: competition

    I don't believe there has been a lack of attempt at competition. In fact it seems I keep reading news of of online music services closing their doors all the time.

    This isn't because Apple forces them out . . . the customers have chosen, it's just that they have chosen iTunes. If someone builds a better mouse trap and a music delivery system that works on that mouse trap, more power to them.

    iPods and iTunes just plain work for the every day person, be being one of them.

    That's my vote in the marketplace, so record company, b**** somewhere else. And, Testudo, I love competition as much as the other guy, but just because? Most companies built something because iTunes and iPods were out there, they didn't "innovate" at all, hence the consumers sticking with what works best for them . . . iTunes.

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