Amazon MP3 not taking users away from iTunes

When Amazon launched its Amazon MP3 online music store last year, the company offered a radically different formula from that of Apple’s iTunes Store: music from all major record labels in high-bitrate, digital-rights-management-free, MP3 format, but with similar (and in some cases lower) pricing than Apple. Surprisingly, quotes a study by market research firm NPD Group that says Amazon MP3 isn’t taking many customers away from the iPod maker’s service.

According to NPD, only 10% of users who purchased music at Amazon MP3 in February were previous iTunes Store customers, despite the fact that Amazon’s MP3 tracks play on Apple’s iPods. Yet even without stealing away Apple’s customer base, NPD says Amazon MP3 eclipsed Wal-Mart to become the number two online vendor of individual music tracks in February.

These numbers are a “healthy indication that the digital music customer pool can expand into new consumer groups who have not yet joined the iTunes community,” NPD concludes. Of course, Amazon still has a long way to go before catching up to Apple—the iTunes Store’s music sales are ten times those of Amazon MP3, NPD adds.

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