updated 10:10 am EST, Wed February 27, 2008
iTunes to beat Wal-Mart?
Music sales from the iTunes Store will likely surpass those of budget retailer Wal-Mart by the end of 2008, says the president of NPD Group's Music division. The research firm yesterday released a report indicating that iTunes has already achieved the number-two position in the United States, surpassing even Best Buy and Target. NPD's Russ Crupnick now says, though, Wal-Mart does not pose any serious obstacle in an increasingly digital music market. "Digital sales were up close to 50 percent and CD sales were down 20 percent last year," says Crupnick. "Even at half that growth rate in digital sales, Apple will in all likelihood catch Wal-Mart this year."
Compounding the issue is that as physical sales fall, retailers are either shutting down stores or scaling back their music selection, which creates a self-perpetuating cycle as shoppers are unable to find CDs for the music they want. The iTunes Store also has an inherent advantage over digital sales from the likes of Wal-Mart, Crupnick argues, because teenagers are leading the switch to digital, and many of them do not have credit cards. The ubiquity of iTunes Gift Cards means teens can pay for music using their own cash, a much more convenient proposition.
"That's the question that the music industry has to answer soon," Crupnick adds. "How do we get young people to start paying for music again? They've got to make it easier for teens to buy online. Apple CEO Steve Jobs has done a wonderful job of this. Teens have a way to do commerce with iTunes."