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iTunes Dominates Download Market & Streaming Audio Grows

The NPD Group recently analyzed the retail music market and found that Apple owns a 29 percent stake of all music sales and that half of all online music users stream the free, ad-supported Pandora service.


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A recently completed study by The NPD Group finds that during the second quarter of 2012 Apple owned just about two-thirds of the digital download sales market, and that online streaming services are growing more popular because of mobile devices.

Earlier this year Apple Inc. broke its long-time rival, Microsoft's record to become the most valuable company ever. With products like the iPhone 5, new iPad and its companion iTunes service, the Cupertino, Calif.-based company should continue to be Wall Street’s benchmark for quite some time.

A newly released study conducted by The NPD Group further validates Apple’s market dominance through findings that estimate the company owns nearly two-thirds of the music download market. According to the Port Washington, N.Y.-based firm, Apple owned a 64 percent share during the second quarter (Q2) of 2012 and 29 percent of all music sold at retail.

NPD is basing its findings on its “MusicWatch” and “Music Acquisition Monitor” tracking services, and it adds that digital music sales will grow by about 10 percent on a unit basis by the end of the year.

Breaking down the entire digital audio market, NPD estimates that Amazon’s MP3 store finished second to iTunes in Q2 with 16 percent market share, with Google Play, eMusic, Zune Music Pass and a few others each capturing 5 percent or less of the remaining sales. NPD also points out that consumer awareness of digital music services beyond iTunes is growing and that the download market is thriving despite the increasing presence of streaming music sites.

“Despite increased usage of streaming radio and on-demand services, the market for digital ownership is still growing as the market evolves from the desktop to the pocket, and Apple remains well positioned as the market leader,” says Russ Crupnick, senior vice president of industry analysis for The NPD Group. “Growing consumer awareness of Google Play was aided by the expanding footprint of the Android mobile platform and [it] represents the first step toward customer adoption. With continued Apple strength and strong entries by other emerging players, Zune Music Pass, Rhapsody and other legacy services have seen awareness fall.”

Analyzing the entire retail music landscape (downloads and physical media) in Q2, Apple owned a 29 percent market share, followed by Amazon/Amazon MP3 at 19 percent and Walmart at 11 percent. Music consumption’s biggest growth, however, occurred in the online radio and on-demand service sector, according to NPD. Leading the online market is Pandora’s free, ad-supported service, which reportedly represents half of all Internet users during the second quarter of 2012. Clear Channel’s iHeartRadio service followed with 25 percent market share and Spotify came in just behind iHeartRadio at 19 percent.

Consumer awareness is also growing in the streaming service market, and according to NPD, digital music listeners don’t restrict themselves to a single service. The NPD Group points out that 64 percent of iTunes users also listened to online radio. “Pandora deserves credit for becoming the premier application beginning in 2008 with the iPhone, and expanding to the new generation of devices. Mobile ubiquity helps increase consumer awareness. The strong usage levels reflect an excellent listener experience as well,” says Crupnick. “The rising popularity of online radio helps explain Apple’s rumored interest in streaming radio. As listening migrates from downloads on laptops to streams on phones and tablets, it would make sense for iTunes to offer customers the same integrated experience they have been known for by adding a streaming capability.”




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Article Topics

News · Audio · Video · Digital Media · Ipad · Apple · Itunes · Iphone · Spotify · Android Os · Iheartradio · Pandora Radio · The Npd Group · Music Downloads · All topics

About the Author

Robert Archer, Senior Editor, CE Pro
Bob is an audio enthusiast who has written about consumer electronics for various publications within Massachusetts before joining the staff of CE Pro in 2000. Bob is THX Level I certified, and he's also taken classes from the Imaging Science Foundation (ISF) and Home Acoustics Alliance (HAA). In addition, he's studied guitar and music theory at Sarrin Music Studios in Wakefield, Mass.

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