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Apple still the music king

The iPod may not be too financially meaningful these days (3% of trailing-12-month sales) to Apple (NASDAQ: AAPL), 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 (NYSE: 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.

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The Motley Fool’s purpose is to help the world invest, better. Click here for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

A version of this article, written by Evan Niu, CFA, originally appeared on fool.com.

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