Is Interest in Online Music Fading?

A new study claims fewer U.S. consumers are downloading digital music than before.

Research firm NPD Group says that, while Apple Computer's ITunes service remains the clear market leader in the sector, the number of paying customers using such services has declined since April.

Consumers paying for downloads fell from a peak of 1.3 million in April 2004 to nearly one million users per month in May, June, and July, the researchers say.

It believes the downturn reflects the end of several promotional and special price offers made by several new services on launch.

Commanding Lead

Despite frequent attempts to compete with it, Apple remains at the top of the tree in the growing new market. The company commands "nearly 70 percent" of the legal download market between December 2003 and July 2004.

Napster took 11 percent of the market, while MusicMatch, RealNetworks, and Wal-Mart Stores all took six percent of the market each.

NPD vice president Russ Crupnick says: "Our research suggests that at this stage of the business it's not so much about building share as it is about creating demand for paid downloads."

An industry insider observes that consumers may have been distracted by summer vacations in the period.