Amazon finds niche in iTunes-dominant market

The NPD Group just sent out some interesting statistics, based on a study conducted by its music-tracking service.

"In 2008, 87 percent of digital-music buyers in the U.S. used iTunes to download music, versus just 16 percent who used Amazon MP3," according to a spokesman for the research group. (Those surveyed could list more than one store.)

On the face of it, the study's numbers don't sound so bad.

Russ Crupnick, an NPD analyst agreed that they should encourage Amazon. For one, the online retailer's music store is in second place only 18 months after opening. Amazon's digital-music store is also faring better than most of Apple's previous challengers, Crupnick said.

"It used to be that iTunes was first, and second was practically nobody," Crupnick said.

Amazon MP3 has begun to catch on with an audience that is a little older than the average iTunes shopper, and that's good, Crupnick said.

"I suspect a lot of consumers, some of them a little older, are still buying CDs," he said. "That's going to help Amazon because they aren't battling over every crumb with iTunes. They'll share some customers and have some of their own, and that will help the company with growth."

The other major point the research shows is just how strong the iTunes franchise is, according to Crupnick. Apple's music store is home to almost 90 percent of the music buyers.

For people wary of the price changes set to hit iTunes on Tuesday, according to a report in the Los Angeles Times, Crupnick said the NPD Group will be tracking sales very closely, but he's very skeptical that the variable pricing structure Apple is adopting (ranging from 69 cents for catalog songs to $1.29 for newer hit songs) won't harm sales.

[toosday]

Amazon deserves credit for being the first to say to record labels "if you want your songs to have DRM, then they won't be on our site." In fact, to this date, I believe Amazon MP3 is the only store to say that to labels.

Amazon has great deals and I hope they continue to find their niche. Personally, I use Lala to buy/store my music and Amazon if I'm looking for dirt-cheap deals.

[BigGuns149]

To be fair Emusic was selling DRM free tracks before Amazon started selling DRM free tracks. There is no question that Amazon was the first major seller of DRM-free musics online and that their move to sell DRM-free music has really changed the industry since then, but they certainly weren't the first.

While Amazon deserves quite a few plaudits for moving away from DRM they weren't the first and they certainly aren't the only site to only sell DRM-free music.

[herddubbs]

walmart launch with DRM-free content from the record labels about a month before amazon - granted, no parental advisory lyrics...but other than that the same major content

[john94857]

I agree completely. iTune is somewhat of the de faco place to get digital music but Amazon has also become a major force with its MP3 stores. I was able to get several albums for good prices and not having to worry about DRM either. Just love the the portability of pure MP3 files.

On the note about Amazon, I recently came across an interesting table that details the discounts on Amazon at http://www.uberi.com

Maybe others will find it useful too (or perhaps amusing).

[BigGuns149]

Now that iTunes has dropped Fairplay the argument about DRM has became irrelevant to one's decision of deciding between Amazon and iTunes. I agree with you that Amazon often has better prices, but DRM is no longer part of the equation in deciding whether to buy from iTunes or Amazon anymore.

[zizzybaloobah]

I search for music on iTunes, but buy it from Amazon when they have it. I also enjoy that Amazon also provides many free selections at any time, and offers great deals on *new* releases, not just old stuff.

The fact that their download tool makes it easy to incorporate purchases directly into the iTunes library, probably also has a lot to do with the speed at which Amazon's MP3 business has grown.

[AlbertoPlantilla]

I buy music from Amazon because they have mp3 which play on anything, and they have deals on even hot music so that its in some cases $.79 and that would make it $.50 cheaper than iTunes when the variable pricing change happens.

[shishcone]

Are you sure it is 87 to 16 percent? That doesn´t sound too real to me :)
Anyway, I buy music on iTunes, because the quality is just great and you get all the stuff including Genius,...

[gsmiller88]

I thought that too but I'm assuming that some of those surveyed have used both Amazon and iTunes (hence the overlapping percentage).

[shootthecops]

buy cds, rip lossless

[gsmiller88]

I would absolutely adore an online music store that offered lossless content.

[BigGuns149]

If your top concern is quality than you are absolutely correct. Depending upon the price of the CDs and how many of the songs you really are interested in though you may end up paying considerably more per track that you actually rip. Nevertheless for a lot of people who mostly listen to music on their MP3 player with cheap headphones you aren't likely to notice a difference between lossless and 256kb encoded MP3/AAC files.

If you mostly listen to music through a good stereo system or high end headphones than you have a point, but a lot of people couldn't care about the quality difference that their equipment can't reproduce anyways.

[thelemurking]

I absolutely hate iTunes... but I love my iPod Touch so much that I learn to deal with it. I wish Apple would let you simply drag and drop songs over like it was a folder on your PC instead of having to open up iTunes and go through that whole ordeal. Better yet... if I could go to a music folder on my PC and right click and do a Send To iPod... that would be fantastic. You can do this with Sansa and other players... why do I have to open up a huge ass player+store+library app if I just want to send a few songs over?

[Mister Winky]

Try MediaMonkey. It has great features, it performs very well (iTunes is still patehtic on Windows) and it provides native iPod sync capabilities.

http://mediamonkey.com/

[br1zer]

I love amazon. It imports effortlessly into windows media player without the clutter of CD's or the memory eating behemoth that is I -Tunes.

[seven7dust]

iTunes 8.1 isn't so bad you should try it !
it's been greatly improved opens in 2 seconds even on vista

[Mister Winky]

iTunes on Windows still blows the big donkey if you have a large media library. On my new 3.33GHz dual core PC with 4GB of RAM, a 10,000RPM HD and 64-bit Windows Vista, everything runs very fast...except iTunes. It never uses more than 150MB of RAM, but it chokes for 5, 10, sometimes 20 seconds at a time when switching between views, etc.

iTunes has sucked badly on every version of Windows I have ever run, no matter how fast the PC. MediaMonkey is the solution.

[Seaspray0]

seven7dust, whenever itunes does an update, it loads quicktime and safari, neither of which has anything do do with managing music and synchronizing an mp3 player. Go look up the definition of malware.

[ThePrairiePrankster]

Amazon's mp3 store is extremely easy to use and they get a lot of traffic due to their selling all kinds of items besides music. DRM free and a great selection at Amazon. The iTunes store I find easy to use and has a great selection too, but I haven't bought from iTunes in years. I do not like DRM and sound quality of AAC and mp3 is less than acceptable on hi def sound systems but OK for my cheap mp3 players and ipods. So I mostly rip from CDs to mp3 rather than buy lo-fi music in the 1st place unless I am just looking for a single song.

[Chapmaniac]

I buy EXCLUSIVELY from Amazon now. Apple is too proprietary for my tastes. Even if iTunes is serving DRM-free music, they're not MP3 files. I know you can convert to MP3 in iTunes but I'd actually prefer not to have iTunes installed at all at this point.

[SactoGuy018]

Amazon did a couple of things that made their MP3 download store very viable:

1) They offered the music encoded in 256 kbps variable bit rate MP3 encoding format. This meant very good sound quality, far better than what Apple offered at the time and because it is a true MP3 file, it meant almost every portable music player out there could play back the files.

2) By not putting DRM on the files, it made it very easy to copy the music from the computer to a portable music player.

3) Amazon wisely offered a free download program that could put a playlist of the downloaded files in either iTunes or Windows Media Player 10/11. That made syncing with an iPod or any portable media player very easy to do.

4) Amazon was able to secure (pun not intended!) deals where they could sell full albums at loss-leader prices to entice buyers. Recently, Amazon offered U2's new album "No Line On The Horizon" for only US$3.99 via MP3 download, which resulted in a huge number of downloads of this new album.

While I applaud Amazon's success, I wish they would make it possible to download the music in either MP3, WMA or AAC formats. After all, server disk storage is dirt-cheap nowadays and Amazon could easily store the album in digital format in the three major encoding formats I mentioned.

[fighter_of_C]

I have been an iTunes shopper since iTunes open it's store. I have tried other services(stores) and just can't get past the user interface, they suck compared to the iTunes Store(I am saying this for my own use and no one else's). After learning of Amazon and it's MP3 store I am hooked! Here's why:
Amazon has so much free content when it comes to music. That is what got me to be a come back shopper. I also like that almost day there is an album for .99, somedays it can 1.99 but still what a deal! Albums I wouldn't consider buying on iTunes I end up buying on Amazon just because the price is great.

[rocketjam--2008]

I bought exclusively from Amazon other than the odd iTunesPlus song. Now that Apple also offers everything DRM free and 256kbps, I buy from both... just depends on who has the best price on the item I'm looking for.

[michael DuKane]

Interesting article. You need to clarify your numbers or at least qualify the research. 87% + 16% = 103%. One would have to believe that users use more than one store or the research is statistically inaccurate. If you add into the numbers e-music, Rhapsody and the many others, the number would be well over the survey population. I think good research is important but when the numbers don't add up its just plain misleading.

[jfitch]

The article says "Those surveyed could list more than one store." That's why it's over 100%.

[dk jones]

i think the competition is good & keeps upping the game so consumers can continue to have more choices & improved services, but i buy CDs & share among friends, then rip to iTunes in a less lossy format for my musical enjoyment. from the iTunes Store i occasionally rent full length movies(mostly older titles, so they're in SD), get the free TV shows in HD w/ SD for iPods(watch movies & TV shows on my HDTV connected to the Mac & my 5.1 sound system--better than watching on a 17" iMac screen) & the podcast content(free) for watching or listening on my iPod Touch or Nano, i've also bought a few movie shorts for watching on my Touch, so i use a broad range of the media content available @ the iTunes Store. i've ripped a bunch of DVDs as well to the iMac that plays server, for porting video or music to my iPods, the main entertainment system or late night/lazy day watching or listening when i'm in bed w/ MacBook connected to bedroom TV or to a sound system. so for me, because i'm all Mac, iTunes is more a media repository & manager for all the media that i share throughout my house via my MacBook or Airport Express, controlled w/ the Remote app or put on my iPods, than it is a store.

[Plumadona]

After looking at iTunes today for the new pricing, I'm more convinced than ever that Amazon is the way to go. The songs I wanted were 8 to 30 years old; one was $1.29 and the rest were .99 - no $0.69 cents songs. In fact, the only price drop songs I saw were some obscure doo wop songs. As others have said, Amazon gives great freebies and incredible sales. As one who has partaken of both, I'll gladly give them my business when I can.

[seven7dust]

ya the new pricing sux this whole DRM free debacle is worthless to me and highly overrated

[SLSLR]

I wish everybody who comments would read the article thoroughly - it states clearly that people could vote for MULTIPLE stores - hence 16% of the people use Amazon and 87% use iTunes which means a percentage use BOTH!!!

[Truntru]

Why don?t more people use the zune pass? For $15/month (up to 3 zunes and 3 computers) you can download as much temporary music as you would like, and also keep in your collection forever 10 songs. You can?t find a better deal anywhere.

[seven7dust]

pandora and Last.fm are free BTW
and they work on iPhones ,iPod touches and Android devices too !