Report: Apple iTunes Music Store more popular than most peer-to-peer file sharing services

iTunes is proving to be a formidable competitor against free peer-to-peer (P2P) file-sharing services, The NPD Group reported today. According to information from NPD’s MusicWatch Digital service, Apple iTunes’s industry-leading a-la-carte download store tied with LimeWire as the second-most-popular digital music service in March, 2005. Both iTunes and LimeWire were used by 1.7 million households. The most popular digital music service that month was WinMX, which was used by 2.1 million households to download music. Paid a-la-carte music offerings from Napster and Real Networks also placed in the top ten, alongside other P2P services like iMesh and Kazaa.

“One of the music industry’s questions has been when will paid download stores compete head-to-head with free P2P download services,” said Russ Crupnick, president of the NPD Group’s Music and Movies division in the press release. “That question has now been answered. iTunes is more popular than nearly any P2P service, and two other paid digital music offerings have also gained a level of critical mass. These digital download stores appear to have created a compelling and economically viable alternative to illegal file sharing.”

In total, four percent of Internet-enabled households in the United States used a paid music download store in March, 2005. A large number of these consumers were over 30 years of age (reporting an average age of 33 years and an average household income of $83,000). Though younger demographics are more likely than others to share files on P2P services, NPD’s research shows that older consumers are more likely to be deterred by the recording industry’s anti-piracy litigation efforts.

The growing legal download services provide a perfect alternative for the post-college demographic. “They have diminishing free time, and more disposable income,” said Crupnick. NPD’s research shows that the litigation raised awareness of legal issues surrounding P2P music downloading, which provided the final tipping point for many of these older, more financially secure customer segments. Those that had tried digital music through file sharing were slowing down or stopping that illegal behavior, and many post-college consumers are leading the charge into legal a la carte downloading.”

The following list shows the top ten digital music services, based on the number of households acquiring a digital song in March 2005:
1. WinMX (2.1 million)
2. iTunes (1.7 million)
3. LimeWire (1.7 million)
4. Kazaa
5. BearShare
6. Ares Galaxy
7. Napster
8. Morpheus
9. Real Player Store
10. iMesh

Sources: NPD MusicWatch Digital information is collected continuously from the Windows PCs of 40,000 online panelists balanced to represent the online population of PC households. Information reported compares March 2005 to March 2004 household activity of consumers who acquired a digital song file from either a paid digital download service or a free P2P file-sharing service.

Related MacDailyNews articles:
Apple’s iTunes Music Store passes 430 million downloads, market share increases to 82-percent in May – June 07, 2005

22 Comments

  1. I wonder what the numbers for Napster and Real are. ” width=”19″ height=”19″ alt=”tongue laugh” style=”border:0;” />

    Not to mention MSN Music.

  2. I wonder if this estimate takes into account the Mac users that weren’t represented in the study. If not, then iTunes share could be quite a bit higher.

  3. Just for kicks, last week I subscribed to the iTunes Top 100 Songs RSS feed for every single international iTunes Music Store (all nineteen of ’em) in each of the Blues, Folk, Jazz, Latin and World genres. That’s 95 RSS feeds, each charting 100 songs. lol.

    Interestingly, it appears that Apple actually does pretty much refresh all of the iTunes Music Store charts on a daily basis. Not suprisingly I guess, the artists appearing most commonly in the iTMS charts often seem to be reflective of those albums which Apple is currently promoting at any given iTMS, but the charts also reveal that the various stores do indeed offer a wealth of great music which is unique to each country.

    Frankly, now I’m just drooling to find a way to be able to purchase from all the iTunes Music stores instead of just from the single store alloted to my country of residence. Anybody know a good hack which might accomplish this?

  4. Whoa. There’s a major problem with this “Report”. They measure by HOUSEHOLD, when they should measure by SONG. According to the method used in this report, if Family A buys one song from iTunes and Family B downloads 1,000 songs from Kazaa, they are counted equally. That ain’t right.

    If a user is required to pay per download, they are much more discriminating with their downloads. They only download songs that they KNOW they’ll enjoy. They will have heard the song beforehand (on the radio, for example) or they’ll listen to a clip of the track to see if they like it first. They have to make a value judgement: Is the song worth $0.99. If not, they won’t download it. When the download is free, however, they don’t have to make that value judgement. If they don’t like the song after the download, hey, at least it didn’t cost anything.

    I’d be more interested to see actual SONG counts. Alas, I don’t know if it’s possible to get an accurate song count on P2P downloads.

  5. “There’s a major problem with this “Report”. They measure by HOUSEHOLD, when they should measure by SONG.”

    I disagree for the very reasons you state. Of course you’re going to download a lot more of something when you’re stealing it and you know it won’t cost you anything, that’s a given. It’s more important to know the number of individual households that are buying vs. stealing, not the actual amount of songs it involves IMO.

  6. But what does this have to do with Intel? Won’t someone please think of the children?! ” width=”19″ height=”19″ alt=”tongue rolleye” style=”border:0;” />

  7. RC-

    I understand what you’re saying, and even agree with you to a point. But the article is claiming this evidence as proof of popularity. It even goes so far as to say, “iTunes is proving to be a formidable competitor against free peer-to-peer (P2P) file-sharing services”.

    If I want to measure the popularity of a movie (or how competitive it is when compared with other movies), I don’t try to figure out how many households have had at least one member view the movie, I simply count ticket sales.

    It seems the authors found a way to make the facts suit their thesis. That’s my contention with this article.

  8. There is a second problem with this report.

    “information is collected continuously from the Windows PCs of 40,000 online panelists balanced to represent the online population of PC households”

    It excludes the 16% of computer users who use Macs that most likely use iTunes.

  9. I remember the argument of music and movie execs as they whined about millions of pirates downloading their content on the Net. “How can you compete against free?” they whined. “We need to pass laws making file sharing illegal, but there’s not way you can compete against free!”

    Then Steve Jobs came up with iTMS and said, “You can compete by offering a superior experience for a low enough price. Because there are millions of people who think their time is worth more than spending 20 or 30 minutes finding and downloading a song at the right bit rate on a file sharing network than it would cost a $1 to buy it from iTMS in 2 minutes.”

    How can you compete against free?

    Hey, we’ve been buying bottled water by the billions for many years now, because the quality is better than tap and it’s convenient. Who would’ve thunk people would pay for bottled water.

    Sure not the music execs.

  10. “I wonder what the numbers for Napster and Real are.

    Not to mention MSN Music.”

    Well, if we take the figures from the other story, about iTunes 82% market share, that gives the others a bit less than 400,000 to share amongst themselves. Napster’s probably arond the 200k mark, Real a bit over 100k. And MSN is <50k! But these numbers were before Yahoo opened…

    MW: things are looking “black” for MSN Music.

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