News: iTunes now accounts for 25% of all music sales in US

A recent study by the market research group NPD showed that digital music purchases continued their steady rise to market dominance during the first half of 2009.  While that fact in and of itself isn’t all that surprising, what share of the overall music market iTunes now makes up is enough to knock the socks off even the most passionate Apple devotee: 25%.

That’s not 25% of the digital market — that’s 25% of the total market.  This makes them the largest music seller in the US, beating out their closest competitor Wal-Mart, currently sitting at 14% of total music sales, by a whopping 11 points.

Other figures are just as impressive.  In the digital arena iTunes isn’t only #1 — it’s blasted away the competition.  In terms of digital music sales iTunes now represents 69% of the market.  It’s closest competitor AmazonMP3 comes in at only 8%.  This runaway lead in the digital music market is in stark contrast with the relatively balanced sales in physical music.  The four leaders of CD sales — Wal-mart, Best Buy, Target and Amazon are all within a few points of each other, covering 20%, 16%, 10% and 10% of the CD market respectively.

How could one market showcase such a distinct leader while another seems to offer up a balanced competition?  Brand recognition?  Strong hardware support?

AmazonMP3 has attempted to buck the trend, offering up DRM-free music and better prices and a host of other options.  When Apple saw that the service was gaining traction it went ahead and changed its feature set to offer up the things that were making AmazonMP3 so popular.   What can a company like Amazon do to climb past 8% of the market, or more accurately, bring iTunes down from 69%?

What is iTunes doing right that everyone else is doing wrong?  What, if anything, could competitors do to level the playing field?

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