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5/26/2010
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Amazon Ties Wal-Mart In Online Music Share

Apple iTunes remains the leading U.S. music retailer with 28% market share, but Amazon increased by 3% to tie Wal-Mart for second place at 12% of all music purchased.

Apple, the largest U.S. music retailer, gained market share in the first quarter, as Amazon also increased share to tie Wal-Mart for the number two slot, a research firm says.

Apple's iTunes store accounted for 28% of all music purchased in the United States in the quarter, an increase of 4 percentage points since the same period a year ago, The NPD Group reported Wednesday. Amazon gained 3 percentage points to capture 12% of the market and tie Wal-Mart.

Apple's gain in market share reflects an increase in purchases of digital-music downloads, which is the only way music is sold on iTunes. Sales of such tunes accounted for 40% of the overall music market in the quarter, a 5-percentage point gain from a year ago, according to NPD.

However, Amazon sells CDs, as well as downloadable tunes in MP3 format, giving it a stronger position among music lovers. "This dual-pronged approach of selling both digital music and CDs helps attract the most valuable and committed music buyer who prefers access to both formats," NPD analyst Russ Crupnick said in a statement.

As a result, an analysis of the latest numbers shows bigger gains by Amazon. When looking only at CD sales, Amazon's share grew 2-percentage point to 11%. At the same time, its share of MP3s grew 4 percentage points to 12% of the market.

On the other hand, Apple's share of the digital-music download market remained essentially flat in the quarter, growing just 1 percentage point to 70%.

Wal-Mart led in U.S. CD sales with 17% of the retail market. Best Buy was second with 14%, followed by Amazon, 11%.

Nevertheless, CD sales in stores continue to decline, as people find a much better selection online. "Online shopping offers consumers who still want CDs more variety than they would get in a brick-and-mortar store; plus, recommendations, and other interactive features that raise the overall value proposition for music buyers," Crupnick said.

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