Amazon May Be Gaining Traction In The MP3 Market

It’s not like iTunes is exactly looking over its shoulder — the Apple (NSDQ: AAPL) music store has a dominant position in the MP3 market. But (NSDQ: AMZN) is making a very respectable start in its bid for a piece of that market. Last year, 16 percent of digital-music buyers in the U.S. used Amazon’s MP3 store to purchase tracks, according to NPD, the market-research firm. That may not seem like much until you consider that none of iTunes’ competitors, including Napster (NSDQ: NAPS) and Wal-Mart (NYSE: WMT), has even surpassed 5 percent, NPD analyst Russ Crupnick said in an interview. (A commanding 87 percent of digital-music buyers used iTunes to download music).

“Amazon is in the second tier — but at least there is a second tier,” he said. Amazon’s MP3 store debuted in full-force early last year, when it signed on all four major record labels to sell DRM-free tracks, becoming the first online music store to do so. iTunes said in January that it would follow Amazon’s lead by dropping DRM copy protection. Crupnick said that Amazon’s MP3 store had benefited from the company’s existing strength in the music business. “A lot of people, regardless of whether they do anything digital, buy CDs from Amazon,” he said, and therefore decide to give the MP3 store a try. Amazon has not provided any public details about its store’s market position.


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