Tuesday, May 25, 2010

iTunes Still Growing

According to a new report by Billboard Magazine, iTunes's market share has actually increased in 2009 to 26.7% of all music sold in the United States (research firm NPD says it's 28%). That's up from 21.4% in 2008 and more than double the 12.7% the company had in 2007.

Of course, iTunes is the largest music retailer in the United States by far, with 2nd place Wal-Mart at 12.5% and third place Best Buy at 8.7%. The iTune's increase was no surprise since both Wal-Mart and Best Buy are decreasing the number of CD's that they sell and well as the floor space.

Amazon keeps on growing with 7.1% of total sales in 2009 (for the record, NPD also states that Amazon has now tied Wal-Mart at 12%). Surprisingly, it's online Amazon MP3 store has only 1.3% of the market, but that's still good enough for 10th place.

As you can see from the numbers, the days of the "big box" retail stores are coming to a close, at least as far as music is concerned. That's OK because the big box stores were actually one of the reasons for the independent record store decline. With the big box stores taking up so much of the market share before iTunes (mainly because of their loss-leader deals on hit CDs), the life-blood of the industry, the local record stores, were left to die on the vine. This is just another of the many mis-steps of an industry that seems hell-bent on killing itself.

What's going to happen in the future? It should be especially interesting to see what iTunes offers later in the year. Some say it'll be a cloud-based service based upon the infrastructure of Lala, which Apple purchased earlier in 2010. Will that change the dynamics of music retail? Probably no more so than the way the trend is going already.

One thing to remember is that even though mainstream retail of physical product (CD's) is declining, that doesn't mean that CDs are going away any time soon (yes, eventually they will, just not as soon as some predict). What never shows up in the sales numbers are amount that's sold at gigs, which are substantial when you add them all up.

That being said, don't look for big changes at least through the end of the year.

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1 comment:

derek said...

do you have any links to articles that suggest itunes will offer a cloud-based service? it's interesting that itunes purchased lala only to shut it down..

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