Analysts: Amazon's music service growth no threat to iTunes

IDG News Service — Wed, 16 Apr 2008 08:04:41 -0700

Amazon's MP3 service may be growing, but it's not taking much of a bite from iTunes, according to the analysts at NPD.

The analysts are reporting that just 10 percent of those buying music from Amazon's U.S. digital download store are defectors from iTunes. NPD analyst Russ Crupnick explained this as a "healthy indication that the digital music customer pool can expand into new consumer groups who have not yet joined the iTunes community".

Apple remains dominant in U.S. music retail, now becoming the leading U.S. music retailer. Amazon meanwhile has done its level best to become America's number two digital download destination.

The playing field's not in Apple's favour, however, as with the exception of EMI, major labels have been reluctant to allow iTunes to offer songs free from the restrictive DRM technology.

The primary reason for that is clearly not fear of piracy - all the majors offer DRM-free music through Amazon, causing some music industry watchers to question if the labels are colluding their market power to affect development of the digital music landscape.

NPD also suggests that Amazon MP3 overall sales are just 10 percent of those generated through iTunes.