NPD: Amazon MP3 gains foothold against dominant iTunes

When Amazon.com launched its MP3 digital music download service in September 2007, no one expected it to score a knockout blow against iTunes. The real question was: could Amazon make respectable inroads against Apple? A new report from NPD group indicates Amazon has achieved a modest foothold -- with 16 percent of digital music buyers in the U.S. using Amazon MP3 to download music.

Apple's iTunes remains dominant, according to the NPD data, with 87 percent of U.S. digital music buyers using iTunes (the total adds up to more than 100 percent due to people downloading through more than one service). But Amazon's performance shows that it's carved out a place for itself in the market, according to NPD.

"Amazon is sort of grabbing a foothold as the No. 2 digital music retailer," said Russ Crupnick, a senior industry analyst for NPD Entertainment.

"On the face of it, it may not seem like an accomplishment, but honestly no one else has been able to step up and create a shelf for No. 2 slot," Crupnick said, adding, "Most of the other retailers out there that sell mp3 files or digital music like that are 3 to 4 percent."

Amazon launched its MP3 service without anti-copy software known as digital rights management (DRM), and some argue that Amazon's entry into the market played a role in pushing Apple toward the DRM-free model.

Amazon has been expanding its MP3 business internationally, with recent rollouts in the U.K. and Germany.

The NPD data was first reported on Cnet.

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