Apple Named Third-largest Music Retailer

Market analysis firm NPD Group finds Apple is now the third largest music retailer, accounting for 10 percent of the market.

A new report from market analysis firm NPD Group finds that Apple is became the the third-largest music retailer in the U.S. during the first quarter of the year, accounting for about 10 percent of the overall market and unseating Amazon.com from the number tree slot. The overall market leaders remain retailers Best Buy (which garnered a 13.8 percent share of the market) and mega-retailer Wal-Mart, which walked away with 15.8 percent of U.S. music sales. Amazon.com slumped to fourth place with a 6.7 percent market share.

The NPD survey polled some 40,000 U.S. residents age 13 and over. Apple’s ascendence among music retail highlights the growing importance of digital music sales in the overall music market; while Wal-Mart and Best Buy predominantly sell traditional audio CDs, Apple only sells music in digital format.

According to NPD, two major factors contributed to Apple’s increased ranking: first, the company sold an enormous number of iPods over the 2006 holiday season, and many of those iPod owners have engaged in some purchase activity through Apple’s iTunes store. (Although the music industry as a whole is still nonplussed by the amount of digitally-purchased music stored on the average iPod.) During the same period, however, sales of traditional audio CDs also slumped, reducing sales of traditional retailers while magnifying Apple’s digital sales.