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iTunes holds 12.6% of U.S. music market

Digital music sales continue fast growth in the U.S., accounting for 18 percent of the music market there this year, and set to climb to 41 percent of total sales across the next five years, Forrester Research reports.

The report predicts 55 percent of U.S. online consumers will pay to download music in 2013. Despite this strong growth, labels must get used to a smaller value music market, say the analysts, overall the U.S. music market will shrink from its current level of $10.2 billion to $9.8 billion in the next five years.

Forrester also found 64 percent of subscribers to digital music services and 57 percent of consumers who download music have bought a CD in a store in the past year.

Digital music sales are buoyed by the increased availability of DRM-free tracks in the open MP3 format, the researchers said, noting digital music consumers use digital services for an average 60 per cent of their music spending.

The impact of this was most recently felt at Atlantic Records, where over half of US revenue stems from digital sales, it was revealed last week.

In the wider Warner Music Group, the company saw a 39 percent increase in digital revenue ($639 million), representing 18 percent of total revenue, the major label revealed last week.

“I think we’ve figured it out,” Julie Greenwald, president of Atlantic Records, told the New York Times. “It used to be that you could connect five dots and sell a million records. Now there are 20 dots you can connect to sell a million records.”

With Apple holding 70 percent of the U.S. market, these figures suggest the company now accounts for 12.6 percent of all U.S. music sales, though this is impossible to fully verify.

The claim should also be tempered by considerations of the contribution of mobile music, ringtone and subscription-based revenues to the overall digital music mix – but given these competing services hold comparatively thin slices of the pie, it’s pretty certain iTunes could account for as much as 10 percent of music sales in the U.S.

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