iTunes still dominates digital music world

Posted by Dennis Sellers Oct 11, 2008 at 8:03am

Despite Amazon.com Music’s showing in its first year and RealNetworks’ Rhapsody’s gains in part due to expanded advertising and partnerships, iTunes remains the best fee-based digital music destination according to Ipsos’s fifth annual TEMPO Digital Music Brandscape study, reports Seeking Alpha.

Here’s some of the highlights of the report:

° iTunes continued to grow in terms of awareness, usage, familiarity, and “best brand” mentions. It has 57 percent of the “fee-based digital music service or download store.” That compares to 50 percent a year ago and 41 percent in 2006.

° Amazon had a strong first year, with initial awareness, usage, favorability and ‘best brand’ ratings comparable to any of the top brands after iTunes. Moreover, Amazon actually matched iTunes in user satisfaction.

° In perhaps the most significant development this year, however, Rhapsody gained in both aided and unaided awareness, usage and favorability. Although some of this growth may have been trickle-down from growth of digital music, overall, only iTunes and Rhapsody increased in these measures. This suggests that Rhapsody’s growth was not merely a reflection of market-level changes, but a direct result of its redoubled advertising efforts, its commitment to broad partnerships such as those with MTV Networks and Verizon Wireless and the fact that the streaming service competes in a niche alongside rather than in direct competition with iTunes.

“iTunes dominates this market,” says Karl Joyce, lead author of the TEMPO study, “but that by no means suggests that there isn’t room for innovative competitors with differentiated offerings. This is precisely who, according to our research, consumers are paying attention to and rewarding with their patronage. Amazon—unique for offering DRM-free downloads from the catalogues of not one, but all four majors—has done quite well in its first year, easily establishing a place for itself among the other top brands operating in iTunes’ shadow. And then there is the story of Rhapsody. Rhapsody is a success story in how to build a brand’s power through increased awareness. Yet despite this strengthening among key competitors, iTunes’ dominance remains unchecked.”

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