Apple iTunes Still #1, but Amazon Gaining

[MacRumors]

NPD Group released the top leading music retailers for the first half of 2008. The list was based on purchases of CDs or digital music downloads.

1. iTunes
2. Wal-Mart (Walmart, Walmart.com, Walmart Music Downloads)
3. Best Buy (Best Buy, Bestbuy.com, Best Buy Digital Music Store)
4. Amazon (Amazon.com, AmazonMP3.com)
5. Target (Target and Target.com)

Apple's iTunes remains number one amongst all retailers. Apple took the number one spot in April, overtaking Wal-Mart.

Amazon, however, saw a rise in ranking from #5 to #4, which NPD attributes to both strong CD sales as well as Amazon's introduction of their MP3 music store. The digital rights management (DRM) free solution provides iPod users a convenient and compatible alternative to Apple's iTunes.

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[TuffLuffJimmy]

Amazon's catching up fast....

[28monkeys]

WAL-MART will find its way back on top again ...

[Dmac77]

I prefer iTunes over all the other services. Plus Apple is still implementing iTunes plus, so that will help with sales when implementation is complete.

Don

[kresh]

The only problem is that all this proves is online sales are growing dramatically. iTunes has taken #1 and Amazon jumped a spot. The report doesn't say if iTunes is still expanding in growth, just that it is number one. If iTunes is still outgrowing Amazon 3 to 1 they will never catch up.

[tortoise]

Hell, I preferentially use Amazon. Better format by default, and sometimes cheaper. Occasionally Amazon has something Apple does not. It is not as slickly integrated as Apple, but Amazon is doing a credible job.

[kugino]

glad to see amazon moving up. their mp3 daily deals are fantastic...and non-DRM is the way to go. competition for apple and itunes is a good thing for the consumer.

[maokh]

While the iTunes store is a great experience, i actually cross shop (and prefer) amazon. Here's why:

1) mp3 encoded audio files are in much, much higher quality
2) sometimes a tad cheaper
3) not in some obscure ac3 format
4) (most importantly) no DRM or worrying about what is authorized for this and that

Its too bad the selection is not as plentiful as iTunes.

iTunes plus is a joke. If they were really serious, all songs would feature high quality and DRM-free format.

[Abstract]

I would like Amazon Music Store more (if I was allowed to shop there). That's based solely on the high quality, DRM-free mp3 files, which play really well in my car when I burn them to CD.

[Apple Ink]

Well...if Apple expands iTunes across the World at this rate..... I see everyone clamoring up!

[splashman]

Without percentages, this top-5 list is pretty meaningless. Amazon could have stolen significant share from Apple, and we wouldn't know it. Apple's share could have increased, and Amazon's decreased, and we wouldn't know it. All this tells us for sure is something most of us already knew.

I gotta say, though, with millions of iPhones out there, it's hard to imagine Apple's share decreasing. Most likely Amazon's taking share from the other small fry. Just like Microsoft did when the Zune came out.

[collegedu3]

Originally Posted by 28monkeys

WAL-MART will find its way back on top again ...

But Walmart's secret is distribution and cheap manufacturing. In the music retail business, especially now that most of it is online, Walmart's successful strategy isn't as applicable.

[Nermal]

Originally Posted by kugino

glad to see amazon moving up. their mp3 daily deals are fantastic...and non-DRM is the way to go. competition for apple and itunes is a good thing for the consumer.

Indeed. I use the local service Digirama because they offer DRM-free music from Universal and Warner, plus it's good to support the "little guy". Combined with EMI music from iTunes, that's a good selection of DRM-free music between the two services

[SandynJosh]

Originally Posted by splashman

Without percentages, this top-5 list is pretty meaningless. Amazon could have stolen significant share from Apple, and we wouldn't know it. Apple's share could have increased, and Amazon's decreased, and we wouldn't know it. All this tells us for sure is something most of us already knew.

I gotta say, though, with millions of iPhones out there, it's hard to imagine Apple's share decreasing. Most likely Amazon's taking share from the other small fry. Just like Microsoft did when the Zune came out.

Zune? Zune? Hehehe...Zune. I love the sound of that word... Buy a girl an iPod and she will love you forever, buy her a Zune, and she will forget where it came from.

[Wombert]

Originally Posted by maokh

While the iTunes store is a great experience, i actually cross shop (and prefer) amazon. Here's why:

1) mp3 encoded audio files are in much, much higher quality
2) sometimes a tad cheaper
3) not in some obscure ac3 format

err... AAC (not AC3!) is the official, ISO standardized successor to MP3. It's not obscure or proprietary, and delivers higher efficiency and better quality than MP3 at the same bitrates.

[BlueCynicalMoon]

I actually wonder how much of Amazon's gain is from the promotion with Pepsi that has been running since the Super Bowl and is still currently running.

Pepsi Stuff

[KingYaba]

Originally Posted by tuffluffjimmy

Amazon's catching up fast....

Good.

[Matek]

err... AAC (not AC3!) is the official, ISO standardized successor to MP3. It's not obscure or proprietary, and delivers higher efficiency and better quality than MP3 at the same bitrates.

As long as most of the portable players, car stereos and other similar devices don't support it, its technical superiority is quite useless.

Plus, as someone said - Amazon offers higher quality files, although the format they are using isn't as good.

[demenas]

Originally Posted by Dmac77

I prefer iTunes over all the other services. Plus Apple is still implementing iTunes plus, so that will help with sales when implementation is complete.

Don

iTunes Plus seems dead, with no major vendors added since the initial launch. They went to Amazon instead.

I always use Amazon now. No more 128kbps DRM iTunes files for me any more.

Steve

[LanPhantom]

Nice job Amazon but your quest to #1 involves a very large jump from spot 3 to 2. Good luck!!

[MattInOz]

Originally Posted by Matek

As long as most of the portable players, car stereos and other similar devices don't support it, its technical superiority is quite useless.

Plus, as someone said - Amazon offers higher quality files, although the format they are using isn't as good.

It's a better supported than first thought.
Including Zune, SonyEricson's Phones, Nokia Phones.

It's the audio layer to mp4 video.
A lot of portable players and any that play video will support it, but likely say mp4 support not AAC support.

Which is why Apple uses the extension .m4a for DRM free AAC and .m4p for FairPlay DRM AAC.

[alana22]

Add my post to the chorus of Amazon love.. I prefer using it much more than iTunes Store.. better deals as well.

[queshy]

Yay for iTunes!

[johnnyjibbs]

iTunes Plus will expand once DRM is dead. Slowly, the tables are turning.

The problem for Apple is that the music labels are flocking to Amazon because they gave so much away to Apple iTunes in the first place and are trying to recoup (so Apple has less influence on the music business in general). That's typical music companies for you - they always thought it would be a niche and had no foresight that music downloads could get so big...

But I agree with most people that these stats don't really tell us anything new. Make all the headlines you want, it still doesn't tell us if Apple has anything to worry about or not. What is the percentage market share for each?

[MagnusVonMagnum]

Originally Posted by Dmac77

I prefer iTunes over all the other services. Plus Apple is still implementing iTunes plus, so that will help with sales when implementation is complete.

Don

It's not like Apple can proceed further with iTunes Plus or they're in the middle of upgrading their music database as they are NOT. They CANNOT make DRM Free music available if the record companies won't cooperate with them and they are NOT cooperating to make DRM Free music available to Apple (save Capitol and its affiliates and a few independent labels). The music industry has made a concerted effort to bring Apple down a few rungs on the ladder and they are clearly using DRM Free music to do it by giving it to others and not to Apple.

The record companies know full well some of us will NEVER EVER buy music from iTunes UNLESS it's DRM Free (I refuse to be in a situation where music I buy may not be playable some day in the distant future due to DRM or not be able to play it on my car stereo which can handle AAC because it's DRM once again) and so they are trying hard to make us consider alternatives like Amazon and Pandora. Personally, I still buy CDs because I not only insist on DRM Free, but I want uncompressed digital as well when possible. Bandwidth is plenty high enough these days that we SHOULD be able to buy fully uncompressed music online as a direct alternative to buying and then ripping compact discs for those of us that want lossless libraries and/or something like DTS multi-channel music, which requires losslessly compressed or uncompressed distribution formats to function properly.

Some of you may be happy buying DRM protected 128kbit AAC, but I am not and never will be. I want a bare minimum of DRM Free 256kbit AAC or preferably lossless 16-bit or even 20+ bit tracks in my library and that leaves iTunes out of the equation save for its comparatively minuscule iTunes Plus offerings.

Really, to me, this is the reverse of the Psystar thing. Music retailers should have to offer their wares equally to all retailers. A music company should not be able to say they will sell their albums to say Best Buy but NOT Circuit City because they're in cahoots with Best Buy to put Circuit City out of business. So why should someone like Sony or Universal be able to say they will offer DRM Free to Amazon but not Apple? Because they don't like Apple? Can they discriminate on race, age, nationality, etc.? So why can they discriminate on market position? So just like I believe Apple should not be able to monopolize its own operating system market in terms of hardware, I don't believe other companies should be able to monopolize DRM Free music in order to try and reduce or eliminate companies they think are limiting their ultimate capital. Even a free market system needs to have rules to keep thing fair, especially for the consumer. Maybe I don't want MP3s, but want AAC. So I'm stuck with Amazon when I'd rather use iTunes (to get AAC) but can't get DRM Free so I end up back at Best Buy buying entire albums to get a couple of good songs off a given album? That's not really fair to the consumer.

You'd think they would have learned by now if they want the consumer to play fair with them (i.e. buy the music online instead of using something like Limewire to grab it for free) then they should be fair in return and offer the music in formats the consumer wants to buy them in. Given compact discs have been unprotected uncompressed digital since the early '80s, what possible excuse do they have to limit our choices when they are the ones that want us to buy their new song-by-song format instead of just downloading them? I saw a CD at Best Buy the other day that also had a card you could buy instead for like $1 less that entitles you to download the album when you get home. It's like, WHY would I want to forgo having an uncompressed digital archive, have to take the extra step of going online and entering some code and then download an inferior quality version to save a lousy $1??? Geeze, I guess that really is what a CD is worth to them at cost since that's all their willing to discount to sell you an inferior download as opposed to a full quality CD that also acts as your archival backup. It'd probably take no more time to rip the CD into iTunes than it would to download that album and add it to iTunes. Where's the convenience? No, I think CDs will be around for some time to come when that's how the record companies think.

Personally, I was hoping for something BETTER than CD quality, not worse to replace the CD, but clearly the consumer isn't interested in DVD-Audio or SACD when they clearly prefer lossy MP3s.