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)
6. Ares Galaxy
9. Real Player Store
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.
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