Analyst: AmazonMP3 Growth Not Coming at Apple's Expense

Amazon launched its MP3 download service last September, but as of February 2008 customers trying out the new service are not coming at the expense of Apple's iTunes Store. A new report from market research firm NPD, only 10 percent of AmazonMP3 customers had previously purchased digital music from iTunes.

iTunes recently claimed the top spot in the music retailer market, beating out Wal-Mart. However, in February Amazon claimed the number two spot, just behind Apple in the number of a-la-carte music tracks downloaded by consumers in the U.S.

That's not to say that Amazon is close to Apple in sales. According to NPD, iTunes digital music sales are still 10 times that of AmazonMP3 on a unit basis.

The research also showed that 64 percent of AmazonMP3 sales were to males compared to 44 percent for iTunes. AmazonMP3 showed unexpected strength among young adults (consumers aged 18 to 25), but only 3 percent of their customers were teens (age 13 to 17).

In contrast the iTunes Music store sold nearly a fifth (18 percent) of its music to teens. NPD also pointed out that iTunes has a strong franchise in gift cards used by teens and Amazon has a relatively small base of teen CD buyers.

"While it's still very early in the game, there's no evidence that Apple customers are deserting iTunes for a new alternative, either because of price or DRM restrictions," said Russ Crupnick, entertainment industry analyst for NPD. "Amazon may simply be opening new markets from their existing consumer base and introductory promotions."

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