Amazon MP3 (AMZN) Not Killing iTunes Yet (AAPL)


How was Amazon’s (AMZN) first year in the MP3 business? Not great: Music industry execs peg Amazon’s market share between 5% and 10%, according to MediaMemo — similar to the 8% to 10% we reported in July. Meanwhile, Apple’s kept its 70%+ share.

MediaMemo: Billboard reaches the same conclusion, pegging Amazon’s market share at 8%. Lucas Gonze, a smart digital music guy who spent a brief stint at Yahoo after it acquired his startup, does some back-of-the-envelope maths and concludes that Amazon’s store contributed all of $82 million to the music business, and that Universal collected most of that. That same maths means that Amazon grossed all of $39 million from its music store.


  • Few people care about copyright protection, which was supposed to be Amazon’s main selling point.
  • And we think many people — the kind of people who pay for music online, at least — still prefer iTunes’ easy, all-in-one music shopping/playing/iPod management experience, versus buying music on the Web and having it imported into iTunes.

It’ll be interesting to see where Amazon stands in another year. It’s recently won deals to power music sales for News Corp.’s (NWS) MySpace and wi-fi music sales on Google’s (GOOG) first mobile phone, the G1. (It’s also possible that future versions of Amazon’s Kindle could include an MP3 store/player, assuming labels get over the fact that it’s using a mobile phone connection for Internet access.)

But Apple (AAPL) has its iTunes store built into every iPhone, which was the best selling mobile phone in the U.S. last quarter, and every iPod touch, which is supposedly flying off the shelves. That’s not going to boost iTunes sales dramatically, but it should be enough to counter any boost Amazon gets from the G1.

See Also:
The Last Word On DRM-Free Music: No One Cares
Now It’s Getting Interesting: Google Gphone Features Amazon Music Store
Another Amazon MP3 Sales Estimate: 8-10% Of Digital Download Market