Ipsos, a global market research company, says that Apple Inc.’s iTunes, No. 7 in the Internet Retailer Top 500 Guide, still is the alpha dog in the world of fee-based digital music. But Amazon.com Music (No. 1) and RealNetworks’ Rhapsody (No. 89) brands are making inroads.
The fifth annual TEMPO Digital Music Brandscape study, conducted by Ipsos, shows that awareness and use were steady among the most dominant brands this year, but did increase for three top competitors while declining among many lesser-known players. For example, iTunes continued to grow in terms of awareness, usage, familiarity and “best brand” mentions in the study. But Amazon had a strong first year, with initial awareness, usage, favorability and “best brand” ratings comparable to any of the top brands after iTunes. And Amazon matched iTunes in user satisfaction.
Rhapsody made the biggest gains, Ipsos says, in both aided and unaided awareness, usage and favorability. Some of Rhapsody’s growth might have been residual from growth of digital music overall, Ipsos says, but 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,” Ipsos says.
“The reason iTunes’ brand strength has not weakened in light of increasing competitive pressure is that, during this same time frame, consumers became more demanding of the digital music services they use,” says Karl Joyce, lead author of the study. “Table stakes such as good sound quality, variety and being a reputable brand grew significantly in importance versus both of the past two years. As a result of this, lesser-known brands who fail to add unique value and whose offerings are limited are beginning to lose out in favor of larger, more robust services able to meet all of these consumer demands.”
Smaller digital music services will need to come up with new ideas to avoid being devoured by the bigger players. “New innovations are sure to change this market,” Joyce says. “New models, especially those based upon ad-supported streaming, are sure to bring new brands into the space. At the end of the day, though, the digital music market is maturing. Consolidation or closure among many of the smaller players seems inevitable at this point.”
Data on music downloading behaviors was gathered from TEMPO: Keeping Pace with Digital Music Behavior a quarterly research study by Ipsos MediaCT examining the ongoing influence and effects of digital music in the U.S. Data was collected between July 15 and July 28, 2008, via a web-based representative sample of 1,249 U.S. music downloaders age 12 and over.
Matt Williams, general manager at Amazon Webstore, spoke in June at the Internet Retailer Conference & Exhibition and his audio-visual presentation at IRCE 2008 is available on CD-ROM.
