Study: Digital Music Market is maturing

A new study released by Ipsos shows some interesting movement in digital download services. Itunes remains the (very) dominant player, but some other services are making headway as well – primarily Amazon music and Rhapsody.

There are some interesting factors related to Internet radio and streaming at play behind the scenes. Any progress that other services make in competing with ITunes is good for Internet radio. ITunes does provide a decent portal for Internet radio stations but listeners that access stations through ITunes do not see or hear a gateway ad, nor does a banner ad or text link appear on the ITunes player with an audio instream ad. That makes it very difficult to monetize those listeners, so it’s better for Internet radio if listeners come from other significant players develop.

Amazon music sells music downloads that can be played in Windows Media player format. Because of this, many stations offer links to Amazon Music from their own players and sell music downloads on a rev share basis through Amazon. Perhaps this has contributed to the advance in share that Amazon Music has made according to this study. Windows Media is much more flexible in supporting an ad model for Internet radio, allowing banner ads and more options for the player itself.

Walmart, which recently shut down its music download platform, actually has a pretty decent awareness level according to the study. The study does conclude that the successful services in terms of awareness and traffic tend to have a relationship with a big name that provides a “halo effect” – as in the case of ITunes, Amazon, Napster, and MySpace. Its probably more than just a big name, it’s the actual traffic that these entities are able to provide that contribute to the success of their download platforms.

The study mentions the obvious ability of streaming entities to drive downloads, concluding that “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.” That’s for sure – MySpace announced earlier this week that they had streamed a billion songs just a few days after they launched MySpace Music last month.

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