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iTunes Manages to Expand in Crowded Market
October 8, 2008
Thomas Mennecke
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With the launch of Amazon and the dozens of fee-based music stores vying for a piece of the online market, it's remarkable there's any room left for expansion. Yet despite the launch of Rhapsody's DRM-free music venture, iTunes has managed to increase its market presence. While iTunes has expanded, so too has the top tier competition, according to the latest study from Ipsos' TEMPO Digital Music Brandscape.

In the digital fee-based music market, only 3 stores appear to be solidifying their positions as the most relevant players. There's Apple's iTunes of course, with a market reach that appears almost impossible to topple. However, two other music retailers, Amazon and Rhapsody, are remaining competitive. Along with iTunes, these two retailers are expanding - however this expansion is coming at the cost of the lower level competition.

Amazon's music store, which opened less than a year ago, has surged to a 9% market share - thanks largely in part to its DRM-free library. Rhapsody's music service and MP3 store have also proven popular, however, intense marketing by RealNetworks has also helped splash this brand. Rhapsody has increased its share a meager 1% from summer 2006 to 2008 to 7% overall. Not exactly stellar, but compared to everyone else, it might as well be cause for celebration.

Let's take Napster for example. Remember when there were millions of people sharing files? Those days are long gone, and the residual awareness that Napster enjoys doesn't appear to be translating to an increased market share. According to Ipsos, Napster's market share contracted from a respectable 11% in 2006 to a mere 8% in 2008. MySpace and Yahoo! Music are also suffering a contracting market share as well.

With a near 60% market dominance, it seems that very little can unwedge iTunes from the top spot. Rhapsody's popular streaming music service and MP3 store have kept it alive in an extremely competitive market, and the switch to DRM-free music is an interesting move - especially when we gauge success by increments of 1%.

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Authorized Music Store :: iTunes

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