iTunes remains the most well-known digital music brand, while pursued by Rhapsody and Amazon, though MySpace and Last.fm seem surprisingly less well-known, and the mindshare of Napster, Wal-Mart and Yahoo continues to decline.
“iTunes dominates this market,” says Karl Joyce, lead author of the Ipsos’ TEMPO Digital Music Brandscape study, “but that by no means suggests that there isn’t room for innovative competitors with differentiated offerings.
“This is precisely who, according to our research, consumers are paying attention to and rewarding with their patronage. Amazon – unique for offering DRM-free downloads from the catalogues of not one, but all four majors – has done quite well in its first year, easily establishing a place for itself among the other top brands operating in iTunes’ shadow. And then there is the story of Rhapsody. Rhapsody is a success story in how to build a brand’s power through increased awareness. Yet despite this strengthening among key competitors, iTunes’ dominance remains unchecked.”
The annual summer 2008 survey of 1,148 Internet users showed “58% of people believe iTunes is the top fee-based digital music service or download store,” Coolfer explains – up from 51 per cent in 2007 and 41 per cent in 2006.
Amazon secured a 9 per cent share, while Napster’s fell to 8 per cent, down from 11 per cent in 2006. After declining to 4 per cent last year, Rhapsody reached 7 per cent while MySpace slid from 5 to 4 per cent, year-on -year.
In terms of brand awareness iTunes reached 39% – far ahead; Napster achieved 13 per cent.
“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,” explains Joyce.
“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 favour of larger, more robust services able to meet all of these consumer demands.”
“Consolidation of brand power among a handful of larger, better-known digital music services will continue. In this space, halo effects have had a real impact on consumer awareness and usage; if not always on brand perceptions,” Joyce said. “We have seen this with iTunes, Yahoo!, Wal-Mart, MySpace and, now, Amazon. And, just days ago BestBuy acquired Napster, a brand that has ridden a different kind of halo – residual awareness from its stint as the first filesharing service – for years. This acquisition is exactly the type of move we should anticipate as this sector continues to evolve.
“A dedicated or small digital music brand trying to break into this space will not be able to sustain market share unless its offering is truly unique. To-date, Rhapsody is the only top-tier digital music brand without strong, pre-existing brand strength in some other arena.
“New innovations are sure to change this market. 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.”