Report: CDs Still 65% of U.S. Market; iTunes Sells 1 in 4 Tracks

Authored by Mark Hefflinger on August 18, 2009 - 9:49am.

*A correction was made to this story.

Port Washington, N.Y. - While digital music sales are taking a larger share of the U.S. market, and Apple's (NASD: AAPL) iTunes Store now accounts for one of every four songs sold, CDs still comprise 65% of all music purchases, according to a report from market research firm NPD Group. "Many people are surprised that the CD is still the dominant music delivery format, given the attention to digital music and the shrinking retail footprint for physical products," said NPD analyst Russ Crupnick. "But with digital music sales growing at 15 to 20 percent, and CDs falling by an equal proportion, digital music sales will nearly equal CD sales by the end of 2010."

In the first half of 2009, paid digital downloads made up 35% of music sales, up from 20% of sales in 2007.

Among digital retailers, iTunes commands 69% of the market, followed by Amazon MP3 (8%).

Among U.S. distributors of physical music (CDs, etc.), Walmart (NYSE: WMT) leads with 20% of the market, followed by Best Buy (NYSE: BBY) (16%), Target (NYSE: TGT) (10%) and Amazon.com (NASD: AMZN) (10%).

"The growth of legal digital music downloads, and Apple's success in holding that market, has increased iTunes's overall strength in the retail music category," added Crupnick.

"But the importance of the big box retailers shouldn't be dismissed, as long as the majority of music consumers continue to buy CDs."

*Correction: This story originally misstated that Apple's iTunes Store led all U.S. physical distribution. It of course does not distribute physical product. In fact, Walmart leads with 20% of physical distribution, followed by Best Buy (16%), Target (10%) and Amazon (10%).

http://www.npd.com

Published in DMW Daily, August 18, 2009

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Comments

A note about your numbers

Submitted by Geoff Whiting (not verified) on August 26, 2009 - 5:16am.

The numbers you guys have for the stores (Walmart 14%, Best Buy 16%, Target 10% and Amazon.com 10%) are mixing two different stats. The %s for Best Buy, Target and Amazon you have listed are in terms of only physical CD distribution, while the Wal-Mart % listed is for the overall market. The Wal-Mart number for physical CD distribution is 20%. Check out the last sentence in paragraph 4 of the Business Wire press release you link to and you'll see what I mean.