In a study released by the NPD Group this week, it was determined that iTunes makes up one fourth of the entire music market in the United States. Physical media in the form of compact discs still comprise the majority of the share, 64 percent. This percentage has been falling steadily over the past few years proportionally to the rise in digital music sales.
If the current trend continues, digital music sales will overtake physical media in early 2011. iTunes comprises almost 70% of digital music sales with Amazon, Rhapsody, the Zune Marketplace, Napster and other digital services trailing heavily in the single digits. The survey is comprised of U.S. consumers 13 and older and identified a physical music purchase as comprising 12 tracks.
An ignored aspect of digital music distribution within the NPD Group report is music piracy. Industry experts have estimated that piracy would likely account between 15 to 25% of music consumption if they were factored into overall music sales.
While iTunes is dominating in the U.S., a Stockholm company is attempting to rip a giant chunk out of their market share with Spotify, an iPod / iPhone app & web service. Spotify is essentially a jukebox of sorts that allows listeners to play nearly 4 million tracks. The songs are streamed rather than downloaded, but only require the user to listen to one 20 second ad every 30 minutes. The company is attempting to release the service in the United States, but is still in negotiations with the music industry.
This study comes out days after Hewlett-Packard and Dr. Dre announced their combined initiative to raise the bar on digital music production. Dr. Dre has also declared his intention to pursue this initiative with Apple and provide iTunes users with a choice to download higher quality versions of tracks. Similar to services like HDtracks, Dr. Dre wants to skyrocket quality to audiophile levels to correspond with his "Beats by Dr. Dre" line of headphones.
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