If you can’t beat ‘em, join ‘em.
If only the record companies had thought this way when Napster first hit the scene instead of spending tens of millions of dollars in legal fees and associated marketing trying to fight downloadable music. Well, that’s mostly in the past now as the labels have come to learn the power of e-commerce, thanks in-part to iTunes.
A remarkable new study released this week by NPD Group found that iTunes has begun to displace retail chains in music sales. In fact, people are buying more music from Apple’s iTunes than from big chains such as Tower Records and Borders. Wow.
In Q3, the top 10 retailers were as follows (note: numbers within parentheses denote retailer unit-sales position in Q3 2004):
- Wal-Mart (1)
- Best Buy (2)
- Target (3)
- Amazon.com (4)
- FYE (10)
- Apple\iTunes (14)
- Tower Records (Tied for 7)
- Sam Goody (Tied for 5)
- Borders (9)
Despite the fact that iTunes has only been around for a couple of years, there are only six retailers that sell more music.
“The ongoing and growing popularity of Apple’s iTunes Music Store now positions the company as a leading music retailer, and continues to legitimize legal digital music retailing,” said Russ Crupnick, music and movies industry analyst for The NPD Group. “With the growing interest in digital music, forecasts of more iPod demand this holiday, plus the stocking-stuffer appeal of iTunes gift cards, we can expect Apple to increase its share even more by year’s end.”
If you’ve not yet identified what online threats could supplant your traditional business then you’d better do your homework. I guarantee you that Towers Records did not formally take into account three years ago the threat that iTunes has become today. In only a couple of years iTunes has managed to build a business that once took decades to build.
Internet speed waits for few.
