Port Washington, NY, APRIL 15, 2008 – Consumer trials of Amazon's DRM-free MP3 digital music store in February 2008 were, by and large, not attributed to current Apple iTunes Music Store customers. According to The NPD Group, a leading market research company, just 10 percent of AmazonMP3 customers had previously purchased digital music from iTunes.
“The fact that Amazon’s early growth does not appear to be at the expense of Apple iTunes is a healthy indication that the digital music customer pool can expand into new consumer groups who have not yet joined the iTunes community,” said Russ Crupnick, entertainment industry analyst for NPD.
Since its inception on the Mac platform five years ago, Apple’s iTunes music store has dominated the paid digital landscape. Only a few competitors have survived, however, and those that remain garner a comparatively small share of digital music unit sales. In February 2008 AmazonMP3 jumped into second place, behind iTunes, in the number of a-la-carte music tracks downloaded by consumers in the U.S. -- edging out Wal-Mart, which slipped to third in the a-la-carte digital-music download ranking.
Amazon launched its digital music store, AmazonMP3, in September 2007. Major differentiating features of the store, versus iTunes, are DRM-free tracks from all the major recording labels, a higher bit rate for digital files, as well as a price-per-download that is often lower than iTunes.
Apple iTunes digital music sales are still 10 times that of AmazonMP3 on a unit basis, but differences in their consumer demographic profiles are telling. According to NPD’s initial consumer surveys, 64 percent of the AmazonMP3 unit sales were traced to males compared to 44 percent for iTunes. AmazonMP3 showed unexpected strength among young adults (consumers aged 18 to 25), but only 3 percent of their customers were teens (age 13 to 17). In contrast the iTunes Music store sold nearly a fifth (18 percent) of its music to teens. It should also be noted that iTunes has a strong franchise in gift cards used by teens, and Amazon has a relatively small base of teen CD buyers.
“Based on U.S. CD sales, Amazon is among the largest sellers of physical music and boasts a substantial and loyal buyer base -- many of whom may not be in the iTunes market sweet spot,” said Crupnick. “While it’s still very early in the game, there’s no evidence that Apple customers are deserting iTunes for a new alternative, either because of price or DRM restrictions. Amazon may simply be opening new markets from their existing consumer base and introductory promotions.”
Data note: NPD’s monthly consumer tracking only measures unit sales of a-la-carte downloads from services like iTunes or AmazonMP3, as well as a-la-carte downloads purchased from subscription services, such as Rhapsody. NPD does not track subscription music downloads or revenue from eMusic and other subscription music services.
About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us or visit http://www.npd.com.