Please ensure Javascript is enabled for purposes of website accessibility

Apple Is Still the Music King

By Evan Niu, CFA - Apr 16, 2013 at 8:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Consumers may be shifting towards streaming models, but iTunes is still the dominant online music store. Besides, Apple is expected to jump into streaming sooner rather than later.

The iPod may not be too financially meaningful these days (3% of trailing-12-month sales) to Apple (AAPL 0.17%), but the Mac maker is still the music king. According to recent estimates from market researcher NPD, Apple's iTunes Music Store still dominates the music download industry with 63% market share. The news comes as we approach the tenth anniversary of iTunes' launch at the end of this month.

iTunes Music Store. Source: Apple.

Second in line was Amazon.com's MP3 store with 22% of the market. That's 85% of the market controlled by the top two players, leaving just 15% for everyone else. The e-tailer's online music store was launched nearly five years after iTunes Store.

Apple periodically announces iTunes milestones, and in February the company said it hit 25 billion songs downloaded to date. Apple gave the lucky European downloader a 10,000 euro iTunes Gift card to commemorate the occasion. The iTunes Music Store has now expanded to 119 countries and has 26 million songs in its catalog.

Still, there's been a shift toward access streaming models like Pandora's (P) popular radio service. The dominant streaming service perhaps has the most to lose from Apple's imminent entry, with an "iRadio" service expected to launch as soon as this summer. Pandora accounts for roughly 25% of all access model revenue to the music industry, a figure that Apple could put a dent in. The study finds that 41% of consumers listen to Pandora and similar streaming services.

NPD finds that streaming consumers are actually "much more likely" to buy music downloads, downplaying the notion that streaming consumers don't buy music since they can already access it.

The iPod and iTunes remain strategically important to Apple, because the company uses them to ensnare consumers into its ecosystem at an early age. CEO Tim Cook has noted that music will always be dear to Apple. After all, the iPod was the first revolutionary product that Apple launched after Steve Jobs' return.

At this rate, Apple will always be the music king.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$137.59 (0.17%) $0.24
Pandora Media, Inc. Stock Quote
Pandora Media, Inc.
P
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,151.82 (0.25%) $5.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.