iTunes And Amazon Consolidate Leads

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• December 17, 2010

According to a recent Wall Street Journal article, “Amazon Can’t Dent iTunes,” when it comes to selling music.

One of the key differences between the two music retailers is pricing. Amazon often employs steep discounts to draw consumers. For example, Amazon will sometimes price new front line albums $3.99. iTunes usually sells albums for $9.99 to $14.99 the article states. However, despite Amazon’s retail price, it normally pays the entire wholesale price to the supplier. Amazon’s also offers monthly promotions of up to 100 specially priced CDs at $5 each. This product, the article states is the result of a cooperative deal between record labels and distributors.

According to NPD Group, iTunes share of the paid digital music market rose in 2010 from 63.2% to 66.2%. Amazon’s hare also increased shifting up to 13.3% from 11% in the previous year. While album sales overall are shrinking, the digital percentage of those sales continues to grow as consumers switch to the non-physical  format. YTD 2010 physical album sales are off 20% while digital album downloads are up 13%. (The article doesn’t mention that digital album downloads are about 27.5% of total album sales for 2010.)

Image source; WSJ. Click to read full article.

Wall Street Journal article, “Amazon Can’t Dent iTunes,” when it comes to selling music.

One of the key differences between the two music retailers is pricing. Amazon often employs steep discounts to draw consumers. For example, Amazon will sometimes price new front line albums $3.99. iTunes usually sells albums for $9.99 to $14.99 the article states. However, despite Amazon’s retail price, it normally pays the entire wholesale price to the supplier. Amazon’s also offers monthly promotions of up to 100 specially priced CDs at $5 each. This product, the article states is the result of a cooperative deal between record labels and distributors.

According to NPD Group, iTunes share of the paid digital music market rose in 2010 from 63.2% to 66.2%. Amazon’s hare also increased shifting up to 13.3% from 11% in the previous year. While album sales overall are shrinking, the digital percentage of those sales continues to grow as consumers switch to the non-physical  format. YTD 2010 physical album sales are off 20% while digital album downloads are up 13%. (The article doesn’t mention that digital album downloads are about 27.5% of total album sales for 2010.)

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David M. Ross has been covering Nashville's music industry for over 25 years. dross@musicrow.com

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