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. People will pay for information, but increasingly, the quality will have to go up and the price will go down. The coercion model of culture sales will not last… and the existing industrial model is terribly suited for anything else. In its place will rise many iTunes-esque venues, where the distance between our money and the musicians pockets is minimized. iTunes is still too expensive to compete against the growing ubiquity of digital communication. Only by cutting out the fat can prices fall enough to continue to convince people not to share information with one another and instead pay for it. But as iTunes shows, enough people will be honest and pay, but only if they are asked an honest price. For me, 99 cents for a whole album, DRM-free, will convince me to pay. Until then, let them try and stop me from listening to 1’s and 0’s. They can’t.

  2. The is a lot to be said for a great selection of easy to find, good quality, fast downloads.

    Does iTMS have a great selection and is 128 kbps AAC good quality?

    It depends on your taste in music and the quality of your playback equipment. For me iTMS still has a long ways to go on both selection and quality but P2P is not a viable option either.

    Ripping at a higher rate from CD’s, mostly bought used, gives me high quality at about 30¢ a tune. CD resellers are in most major cities and Ebay and Amazon both sell used CD’s. You should retain the CD’s after ripping but most people resell them again, reducing the cost per tune even further.

  3. It was great to hear that since more competitors entered the online music market iTunes’ share went up. This statistic is icing on that cake. I wonder if Apple counted subscription services to their increased market-share calculations.

    It will be interesting to see how pod-casts change the online music market.

  4. Nathan,

    I guess you’re not old enough yet to have ethics. Wait until you finally reach the age of majority (>25 in my opinon), then maybe you’ll understand the importance of not stealing. Especially once you begin to acquire enough personal wealth that you wish not to have people steal from you.

    At this point you’re probably just some young kid who owns nothing so you figure you’re entitled to take whatever you want. Here’s hoping you grow up someday.

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