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Amazon finds niche in iTunes-dominant market

Research firm NPD says Amazon MP3 is gaining popularity among older music buyers. The online retailer is faring better than previous iTunes challengers.

The NPD Group just sent out some interesting statistics, based on a study conducted by its music-tracking service.

"In 2008, 87 percent of digital-music buyers in the U.S. used iTunes to download music, versus just 16 percent who used Amazon MP3," according to a spokesman for the research group. (Those surveyed could list more than one store.)

On the face of it, the study's numbers don't sound so bad.

Russ Crupnick, an NPD analyst agreed that they should encourage Amazon. For one, the online retailer's music store is in second place only 18 months after opening. Amazon's digital-music store is also faring better than most of Apple's previous challengers, Crupnick said.

"It used to be that iTunes was first, and second was practically nobody," Crupnick said.

Amazon MP3 has begun to catch on with an audience that is a little older than the average iTunes shopper, and that's good, Crupnick said.

"I suspect a lot of consumers, some of them a little older, are still buying CDs," he said. "That's going to help Amazon because they aren't battling over every crumb with iTunes. They'll share some customers and have some of their own, and that will help the company with growth."

The other major point the research shows is just how strong the iTunes franchise is, according to Crupnick. Apple's music store is home to almost 90 percent of the music buyers.

For people wary of the price changes set to hit iTunes on Tuesday, according to a report in the Los Angeles Times, Crupnick said the NPD Group will be tracking sales very closely, but he's very skeptical that the variable pricing structure Apple is adopting (ranging from 69 cents for catalog songs to $1.29 for newer hit songs) won't harm sales.