News.blog: Amazon's MP3s not hurting iTunes

Amazon.com's MP3 service is growing but not at the expense of Apple's iTunes, according to a report issued on Tuesday by market researcher NPD Group.

Only about 10 per cent of the people who shopped at AmazonMP3 in February were previous Apple shoppers, NPD said.

This is a "healthy indication that the digital music customer pool can expand into new consumer groups who have not yet joined the iTunes community," Russ Crupnick, entertainment industry analyst for NPD, said in a statement.

Apple's iTunes remains the number one digital music store. AmazonMP3, which launched in September, slipped past Wal-Mart to take over the number two spot in February when comparing the individual music tracks downloaded by consumers in the US, according to NPD.

The big question now is whether Amazon can continue to grow without snatching away customers from Apple.

Amazon may be enticing its existing customers to the music store, Crupnick noted. He said that a Superbowl promotion that Amazon held in February may have drawn regular shoppers to check out the new music service. He also speculated that many music fans are visiting out of curiosity.

"We'll have to wait to see what Amazon can do with those people," Crupnick said. "Does the traffic snowball or does it wane?"

Amazon has at least one major advantage over Apple: Apple's DRM-free tracks are available only from EMI Music, while Amazon offers unprotected MP3s from all four of the major record labels. Also, Amazon sells digital music at a higher bit rate and its songs are often cheaper.

But Amazon has a long way to go, says NPD. MP3 sales at iTunes are more than 10 times larger than at Amazon, the research firm said.