November 21, 2005 1:07 PM PST

iTunes outsells traditional music stores

Apple Computer's iTunes music store now sells more music than Tower Records or Borders, according to analyst firm the NPD Group.

The research company tracks downloads from digital music stores, as well as people's purchasing habits at offline retail stores. During the past three months, iTunes made it to the U.S. Top 10 sales list for the first time, NPD said.

"Taking their growth and others' pain, it's not inconceivable to see them cracking into higher ground in the foreseeable future," said NPD music and movies industry analyst Russ Crupnick.

The benchmark is a meaningful sign in digital music's steady progress--and Apple's domination of that trend--toward becoming a significant part of the overall music business.

According to figures from the Recording Industry Association of America, digital sales accounted for slightly more than 4 percent of the market during the first half of 2005, up from about 1.5 percent during the first half of 2004.

Apple's iTunes has maintained more than 70 percent of the PC-based digital music download market throughout 2005, Crupnick said. That market share is likely to climb slightly when Macintosh customers are added in, but NPD does not track those purchases, he said.

For its comparison, the company compared 12 separate song downloads at iTunes to a single album purchase at an ordinary retail store. Using that measure, iTunes scored higher than Tower, Borders and Sam Goody.

Wal-Mart, Best Buy, Target, Amazon.com, FYE and Circuit City all scored higher than iTunes, NPD said.

10 comments

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Itunes is Just Cheaper..
I have been waiting for this research. The fact of the matter is, Itunes is cheaper. Though I myself like the actualy CD case and all the fixin's, I am fully aware that I can buy the same album for only $9.99 on Itunes. Now music lovers can stay home and buy cheaper music. It's about economics. Why not make my dollar go farther and acheive the same results (i.e. listening to the music I want to!)? That's just good business.
Posted by shaycam (2 comments )
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Completely Agree
I have personally spent over £500 on iTunes music in the past year, its because it is far easier for me to get the music i want on iTunes in an instant and in a way i can do waht i like with immediately. It's cheaper than buying a cd and if i only like a couple of tracks off an album i cna choose just to get those rather than purchase an entire album full of songs i don't want!
Posted by (1 comment )
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Everyday I buy a song;
Not a day goes by that I don't hear a song on the radio or TV and then go to iTunes to find and download it. You can't get that at a record store.
Long live iTunes.
Posted by Maui Cat (7 comments )
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cheaper but lesser quality
I like the option of buying just one song I want rather than the whole CD. But I do wish Apple would increase the bit rate rather than have it stuck at 128kbps.
Posted by stmon99 (32 comments )
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128 kbps is quite sufficient....
... for most listeners. Few have the ears. the equipment, and the
environment to require more. And many of those just think that
they can here a difference.

And if you listen in a car, 128 kbps is gross overkill.
Posted by Earl Benser (4310 comments )
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Hope the Music Catalogs are watching
This is it. This is how music will be purchased going forward. Understand that I purchased a Mac Mini and iPod Nano, for the sole purpose of archiving my existing catalog of CDs, and purchasing new music via iTunes.

There are several things I will NOT do:

- I will not pay more than 99 cents for a single 128 bit iTunes song.
- I will not purchase any music CD with any sort of copy protection scheme on it.
- I will not make significant purchases of CD media any more. AAC files on iPods are far more convenient for large music libraries.
- I will not pay more than 99 cents to purchase a hot new song from a hot artist.

If the music companies want to make more money, here's a clue:

- I might be willing to pay an extra 25 cents for lyrics along with my iTunes song purchase.
- I think paying $1.99 for music videos is reasonable, as long as I get the lyrics and song file included.
- I might pay more money for higher bit rate songs than the 128bit songs currently sold on iTunes. Less compression = truer sound = justified premium.

If I see that the music companies are only offering higher bit rate songs in order to charge me more, I won't buy the song. Eliminating my choices and forcing me to do business your way, is not my idea of making me a satisfied consumer.
Posted by mike.gw (942 comments )
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foolish notion
were online music sale sites to highlight the ability to pay more for a higher quality download, they would only be highlighting one thing in the mind of the consumer: THE EXISTING QUALITY IS INSUFFICIENT. There are many reasons why they use the low bit rate of 128. It is easier to distribute, it is the de facto bit rate, and IT IS INFERIOR to CD quality sound, which I'm sure makes the record companies quite happy.
Posted by mortis9 (370 comments )
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Still only 4% of the market--almost meaningless
It's still only 4% of the market--almost meaningless. CDs in stores aren't going away anytime soon.
Posted by lingsun (482 comments )
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