iTunes No. 2 Music Seller in US

By | February 26, 2008 at 1:18 PM

Apple Inc.’s online iTunes music store is now the number-two music retailer in the U.S. behind Wal-Mart Stores Inc. as measured by unit volume, market researcher NPD Group said Tuesday.NPD said that iTunes moved into second place due to the amount of music it sold during 2007, which was based on a 12-track CD equivalency for song downloads.

The market researcher began tracking music sold stateside during the middle of 2006. In the fourth quarter of that year, Best Buy Co. took second place behind Wal-Mart, while Target Corp. took third place and Apple’s iTunes store fourth place, NPD analyst Russ Crupnick said.

For the full year 2007, Best Buy came in third and Target fourth, he said.

Crupnick called Apple’s move to the number-two spot “fairly understandable given the pressure that’s been on CDs and the almost 50-percent growth in digital downloading in the past year.”

About 10 percent of music acquired in the U.S. was through legal downloads in 2007, and consumers who bought digital music legally through pay-to-download Web sites grew by 5 million to 29 million in 2007, NPD said Tuesday.

Meanwhile, an estimated 1 million consumers did not buy CDs in 2007, and 48 percent of U.S. teenagers didn’t buy any CDs during the year, up from 38 percent in the year before, according to NPD data.

“It wouldn’t surprise me if we see the same things continuing into 2008 because what our research is showing is that teens are continuing to check out on the CD,” Crupnick said.

NPD also said that the amount of music consumers bought in the U.S. rose 6 percent in 2007, though the decline in CD sales and increase in legal digital download sales still led to a 10 percent overall decrease in music spending.

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