The Apple That Defied Gravity: iTunes Moves Up to Top Spot in Music Sales

Apple Inc. has made history on its way to becoming the top music store in the United States. The company’s iTunes music store pushed ahead of previous leader Wal-Mart, becoming the first digital music selling company to go ahead of the mammoth retail outfit.

Tom Adams, the president of Adams Media Research, a consulting firm, said, “It's a major milestone. It is the first instance of an electronic venue surpassing a [bricks-and-mortar] retail venue for any kind of media delivery.”

While Apple officially does not release quarterly sales figures individually for its iTunes music store, a report for the fiscal quarter ended December 29, 2007, said it recorded revenues of $808 million under a category that also included sales at the iTunes store. This number is a 27% hike over the figures for the same quarter last year.

A study by Port Washington, N.Y.-based NPD Group, a market research outfit, indicated that Apple had outsold all other U.S. retailers in the months of January and February this year when it came to music sales. The survey only highlights the prime position the digital media finds itself in today.

The NPD Group report goes to show that the digital media is here to stay, as more and more traditional businesses make the transition rapidly into the digital world to showcase and sell their products, from books to music to video games.

The march of the digital world is affecting traditional businesses across the spectrum. Traditional bookstores, newspapers, and a host of other industries are feeling the pinch and are being forced to lay off staff or even shut shop, unable to compete with the cost-effectiveness and quality that the digital option gives.

The most affected has been, however, the music industry. With the advancements in digital technology, more and more people are now able to use CD writers and have their own playlists. This has also affected the trend of having albums instead of singles. Now, more and more people are opting for single releases against albums.

The iPod, Apple’s digital music device, has captured the imagination of millions across the world. In a statement in response to the news of Apple’s taking over as the Number One music store, Apple’s iTunes vice president Eddy Cue said, “We are thrilled.”

Overall, the number of Americans opting for CDs still outnumber those opting for digital downloads. However, the gap between the two is narrowing fast, and soon digital downloads will be the preferred choice of most Americans. Apple has grabbed the pole position in the music industry in just a span of five years, after it first launched its iTunes music store.

While the NPD Group’s report did not provide exact numbers relating to the albums sold by individual companies, it issued a statement to the effect that it considered every 12 singles sold to be equivalent to one album. The report said sales at iTunes may have received a significant push because of people using their iTunes gift cards in January and February. Wal-Mart and other retail houses also sell these cards, incidentally.

Analysts at the NPD Group say Apple’s hold over the music market would only increase, as more people switched over to digital music. As Russ Crupnick, an analyst with the firm put it, “If you look at what is happening to the CD and the growth of the digital side, it's a pattern that is going to hold.”