Apple's iTunes continues to triumph over Amazon in digital music market

Figures announced by research firm NPD Group have shown that Apple has increased its share of the online music business, increasing its stranglehold over rival Amazon.

Apple increased its dominance in a market from 66.2 percent to 63.2 percent in the third quarter of a year in which it has been investigated by the US Department of Justice over allegations that it was using strong arm tactics to stifle competition from Amazon. 

Although Amazon did increase its own share of the market it was at the expense of smaller firms, as it drove its share up from 11 percent to 13.3 percent in the same period year on year. 

In fact distribution executives at record labels, writes the WSJ, believe that the disparity could even be greater than the figures suggest – as Apple is likely to command 90 percent of the market in any given week, while Amazon would only see 10 percent.

As Apple has controlled such a large share of the market Amazon has had to explore discount options, with the Beatles’ back catalogue released on the same day as Amazon offered Kid Rock’s latest album for the discounted $3.99 somewhat highlighting the two approaches.

Market share for the week of the high profile Beatles launch is not known, but it’s thought that sales per song are in the region of the two million mark for that period alone, while albums were believed to reach 450,000.

In order to remain competitive in the market Amazon has had to employ this strategy, which has lead to a “daily deal” promotion where high profile acts’ albums are offered at a discounted price.  This price is often below the wholesale price that Amazon pays, which is usually in the region of $7-8 per album.

Most albums on iTunes on the other hand retail at around $9.99 to $14.99, with online albums constituting one of the only expanding areas of the music retail business according to the figures. It is noted that after several years of growth in the individual song market it has slowed recently with an increase of just 0.3 percent from the same point in 2009.

The news that Apple has increased its dominance in the online music business will not be welcomed by Amazon. Amazon alleged it was being muscled out of the market by Apple earlier this year.

Apple was accused of putting pressure on the record labels, such as Sony and EMI, who were complying with an industry deal that allowed Amazon to release certain albums a day before the rest of the industry, including iTunes. 

Apple subsequently persuaded labels to stop offering bands releases to Amazon, or would offer lesser known artists, before becoming subject to an investigation by the DOJ.