Amazon nabs bigger share of music downloads (poll)

iTunes still dominates the music download arena, but Amazon is coming on, and other competitors are in the wings.

Apple doesn’t report earnings until next week, but analysts aren’t expecting much of an announcement. The company is under pressure from competitors like Samsung, which starts shipping its new Galaxy S4 smartphone later this month. Apple hasn’t introduced a groundbreaking gadget in a long time.

Even Apple's music business is taking a hit -- from Amazon. The online retail giant snapped up 22 percent of the music download market in the last quarter of last year, according to the NPD Group’s annual music study.

“Amazon has for years had a great CD business,” says NPD Senior Vice President Russ Crupnick. As those same customers have adopted digital downloads, he says, “often times their loyalty to Amazon has stuck.” Loyalty to Apple is slipping. iTunes’ share fell to 63 percent, from 68 percent the year before.

Meanwhile, both Apple and Amazon have to worry about guys like Fletcher Price.

“I would say 99 percent of my music comes from Pandora One,” says the 24-year-old business analyst from Indianapolis, Ind.

Price pays $36 a year to stream music -- without actually owning any of it -- on Pandora. Or he borrows his fiancée’s Spotify account. That streaming service announced plans this week to expand into Asia and Latin America.

Still, Price says, sometimes you just have to own a song. His latest download:  “Gangnam Style” on iTunes. "Just because it was a fantastic song," he says.

NPD’s Crupnick says music streaming won’t dominate the music business any time soon.

“Consumers still want a variety of ways to engage with music,” he says.

Including some pretty low-tech ones. Crupnick says sales of physical, hold-in-your-hand CDs to teenagers were up about 20 percent last year.

 


Correction: An earlier version of this article misstated the rate for Pandora One. The music service costs $36 per year. The text has been corrected.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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