We’re still waiting for for concrete data about the performance of Amazon’s digital music store, which is supposed to provide the music industry and music buyers with an alternative to iTunes. Amazon is mum about nearly everything it does, and so far none of the music labels that work with it have been forthcoming, either. But now we do have an estimate, albeit one from a very biased source: eMusic CEO David Pakman, an Amazon rival, says he thinks Amazon has 4% to 5% of the U.S. digital music market.
That doesn’t sound bad for a store that didn’t exist last fall. But put in unit sales, it looks awfully modest: Nielsen Soundscan says Americans bought 532.7 million digital tracks in the first half of the year. If Pakman’s estimates are right, that would mean Amazon (AMZN) has sold up to 27 million tracks so far this year — during the same period where Apple (AAPL) has sold more than 1 billion (worldwide). Amazon sells each track for up to 89 cents, and the labels take about two-thirds of that, which would leave Jeff Bezos with…perhaps $7 million of revenue.
Could these numbers be off? Absolutely. Pakman says he gets his estimate by talking to the music labels, who tell him that his company is selling up to 3x as many tracks as Amazon is; he pegs his market share at 10% to 15%.* As we said, Pakman isn’t a neutral observer here, and has been tangling with Amazon for the right to call his company the second-biggest online music store in the business. And beyond that, his sample is skewed: eMusic works primarily with smallish indie labels, not the Big Four labels that almost certainly power most of Amazon’s sales.
So it’s certainly possible that Amazon is doing much better — though even 2x better wouldn’t mean much, in terms of market share or dollars. But we have the sneaking suspicion that if Amazon was doing better, we’d have heard about it — if not from them, then from the labels, who are eager to promote the idea of a strong rival to iTunes.
For the record, we’ve forwarded our numbers to Amazon for comment, but haven’t heard back. Anyone want to share any other data points with us? Do so in comments below, via an email to pkafka AT alleyinsider.com, or via our anonymous tip box.
*Prompted by some feedback, let’s spell this out: David says eMusic has 10% to 15% market share based on number of tracks downloaded. But eMusic’s subscription model — a basic plan offers 40 songs per month for $11.95 — means that it’s generating just a fraction of the gross revenue that iTunes and Amazon get per song — 29 cents a track, versus 89 cents or 99 cents.
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