Apple owns 66% of online music market, Amazon a distant second place

As if Apple's share of the online music world wasn't big enough, financial research firm NPD Group is reporting that iTunes is now responsible for 66.2% of the market for online music purchases. That's up from 63.2% earlier in the year, despite intense competition from Amazon, which is way behind in second place at 13.3%. Remarkably enough, Amazon also saw growth this year, raising its share from around 11% earlier in 2010.

The online retailer has been promoting "daily deal" albums that are priced much lower than the same music on the iTunes store, actually selling many of the albums below cost in order to attract new customers. Amazon has also been doing a monthly promotion of 100 albums for $5, which is done with the cooperation of record labels and artists. Despite such aggressive action, the company has yet to make a visible dent in Apple's dominance of the online music market.

According to an article in today's Wall Street Journal, digital album sales have grown rapidly in an industry where CD sales are plummeting and sales of digital single-song downloads are stalling. Apple's album prices are generally higher than those on the Amazon music store, resulting in higher revenues. Amazon's promotion of their online music store has taken the back seat to advertising for the company's Kindle ebook reader, so it will be interesting to see if they decide to actively promote their music business in the future.