Tuesday, December 21, 2010

Amazon Takes Only A Tiny Bite Out Of Apple

I recently read that the research firm NPD Group reported that iTunes now controls 66.2% of online music sales.  In just a few short years, iTunes has taken over a massive amount of the online market and it is not over yet.  However, they are getting some intense competition from Amazon who is now in second place with 13.3% of the online market.  In an attempt to take market share from iTunes, Amazon has been selling selected CDs below cost in order to attract customers.   Still even with lower prices than iTunes, Amazon sales only grew 2.3% compared to 3.0% for iTunes. Some industry people have been saying that iTunes has been putting pressure on labels to pull back on the deals they have been giving Amazon.  ITunes needs to be very careful with any attempt to limit Amazon's ability to discount prices because it begs for an antitrust action. iTunes should be happy with their huge market piece and let Amazon continue to lose money selling CDs below cost. iTunes in my opinion, needs to be very careful not to do anything to slow or block competition because they already control the keys to the online market with their iTunes program that so far no competitor has been able to match.

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