Digital Music

iTunes Dominates Music Sales, While Pandora’s Footprint Soars [STUDY]

ITunes_682_701218aMarket research company The NPD Group has
released findings indicating that iTunes continues to dominate the digital
music market, as well as all music purchases in the United States. In the
second quarter of 2012, iTunes claimed 64%
of the entire digital music market and 29% of all music sold at retail
(including
both digital and physical formats). NPD also reports that the market for
digital ownership of music continues to grow despite increased user adoption of
streaming and on-demand music services.


Coming in at a distant second to iTunes
was Amazon MP3, which saw a 16% share of the digital market. Other contenders
like Google Play, eMusic, and Zune Music Pass each only had a 5% share or
lower. Consumer awareness for Google Play is beginning to grow, but fails to
compare to that of Amazon and iTunes. One out of five Internet users was aware
of Google’s music service in quarter two of 2012, which is said to be an
improvement aided by integrations within the Android Market and Google’s e-bookstore.

"[As] the market evolves from the desktop to the pocket, Apple remains
well positioned as the market leader," said Russ Crupnick, senior VP 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
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."

The
NPD Group expects the digital music market to grow by 10% (on a unit basis) in
2012.

When
it comes to overall music retail (including both physical and digital), Apple
led all music retailers in the second quarter of 2012 with a 29% market share.*
It is here, however, where Amazon closes the gap on Apple – coming in second
place with a 19% share of the overall music retail market. Walmart came in
third with an 11% market share.

*When comparing digital downloads to CD
albums, NPD relies on ‘equivalency’, in which single albums are equivalent to
10 digital-music tracks.

According
to NPD, online radio and on-demand music services continue to be the fastest
growing music consumption methods in the United States. Nearly 50% of all
Internet users were aware of Pandora’s free radio service in the second quarter
to 2012, while one third were aware of Pandora One (the company’s paid
subscription service). Of these respondents, half actually used the service
during second quarter.

Clear
Channel owned iHeartRadio followed behind
Pandora with 25% awareness, while Spotify’s
consumer awareness reached a new high of 19% – a number that has doubled since the
company’s U.S. launch in 2011. In contrast to Pandora, only a quarter of
respondents who were aware of iHeartRadio or Spotify actually used these
services during the second quarter.

NPD
also found that 64% of people who made purchases with iTunes are online radio listeners,
which would help explain Apple’s rumored interest in a steaming radio service. After
all, consumers are beginning to experience higher adoption levels when it comes
to streaming from their mobile devices compared to downloading to their laptops
and desktops. It would only behoove Apple as a company to provide their customers
with an integrated experience by adding streaming capability.

The
information from NPD’s research is based on surveys of NPD’s proprietary online
consumer panel. Digital music numbers reflect paid, permanent digital downloads
only, and survey data was weighted to represent U.S. population of Internet
users (age 13 and older) and tested for statistical significance at 95 percent
confidence level.

Hisham Dahud is a Senior Analyst for Hypebot.com. Additionally, he is the head of Business Development for Fame House and an independent musician. Follow him on Twitter: @HishamDahud

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5 Comments

  1. As a new Indie artist I found this article very interesting. I have experience as a musician/composer but the marketing end is very new to me so I find information like this valuable.

  2. It’s no surprise that iTunes dominates the music market. Apple spotted a gap and the rest of the industry is still struggling to catch up. It’s good to see there are some companies emerging to rival the fruit-based technology giant’s monopoly. It’ll be interesting to see if streaming services are more than just a flash in the pan.

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