Amazon Makes a Slight Dent in iTunes Market Share

Amazon MP3 launched in September 2007, and when it did I wanted it to succeed, as a market dominated by one dominant giant (iTunes) gives Apple too much power. And they've managed to cut out a decent market share for themselves, with 16% piece of the action, according to the market research firm NPD.

Now, that's still tiny compared to iTunes' 87% (numbers add up to more than 100% due to people downloading from more than one service). But it's a decent foothold.

Russ Crupnick, a senior industry analyst for NPD Entertainment said:

"Amazon is sort of grabbing a foothold as the No. 2 digital music retailer. 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. Most of the other retailers out there that sell mp3 files or digital music like that are 3 to 4 percent."

Once Amazon managed to get all the major music labels to sign on for DRM-free music, I suggested to everyone who would listen (no pun intended) that they give Amazon MP3 a try. After all, when you buy something from Amazon MP3 and download it, it drops straight into iTunes via the Downloader, so it's not like it's difficult.

However, now that iTunes is set to start (according to reports) its variable-pricing structure, and also decided to drop DRM, what will happen to Amazon MP3's market share? Will it shrink because it no longer is the only DRM-free game in town? Or will it rise, because of iTunes' variable pricing (and still AAC format encoding)?

Probably the only thing we can be sure of is that Apple will still be the 800-pound gorilla in the corner.