NPD: consumers continue to turn purchasing habit away from physical CDs and over to digital downloads

Retail performance results released today by market research specialist NPD Group have confirmed Apple Inc.’s continuing grip when it comes to U.S. music sales, with the online iTunes Store firmly establishing itself as the number-one outlet in the United States over the first six months of 2008.

According to NPD’s latest MusicWatch survey, Apple’s iTunes Store sits proudly atop the music pile, with American retail giants Wal-Mart and Best Buy following in second and third respectively. The survey’s results were compiled based on January to June purchases of full CDs an a-la-carte digital music downloads whereby 12 digital tracks equates to one complete album.

The only notable shift in top-five placement saw online retailer Amazon move up to fourth on the list, while Target sits in at fifth. NPD notes that Amazon’s improved positioning can be attributed to the reduced erosion of online CD sales when compared to the erosion seen through walk-in stores, and also that Amazon has recently launched its dedicated Amazon.mp3 online store.

NPD also points to Amazon’s rise and the continuing dominance of iTunes as clear indicators of the physical shift across the music market as consumers turn their purchasing habits away from physical CDs and over to digital downloads.

“We expect Apple will consolidate its lead in the retail music market, as CD sales continue to slow,” said Russ Crupnick, entertainment industry analyst for NPD.

“Amazon’s CD buyers tend to be older, so they haven’t abandoned the CD format to the extent seen in the average music buyer,” he added. “Plus Amazon’s successful introduction of its digital download store will help the company improve its position in the future.”

NDP’s survey was conducted across U.S. respondents with a minimum age of 13, who reported on their purchases of physical CDs, digital music, and also wireless over-the-air (OTA) transactions. NPD’s survey does not include the tracking of digital music offered via subscription-based online services. via techherald