[news=http://www.charlesarthur.com/blog/images/itunes.jpg]On June 7, 2005, the NPD Group issued a controversial press release that stated iTunes was more popular than most P2P networks. This release drew a scourging array of criticism from various technology publications, who contend the findings simply did not make sense. On Thursday, it appears the NPD Group has re-evaluated the situation and released a new study which paints a more realistic view of the music downloading world.
The new publication from the NPD Group, located in Port Washington, Long Island, revealed the music downloading landscape is still dominated by free P2P networks. Their study concluded that there were 243 million songs downloaded from the P2P networks they examined, while only 20 million songs were downloaded from pay services such as iTunes.
However, the NPD Group also notices that pay music services are beginning to make headway into the downloading market.
"Two years ago there were nearly 20 P2P music downloading households in the U.S. for every household in which a member paid to download music files. By March 2005 that gap had narrowed to almost two to one. Though paid digital music download services have hurdles to overcome, they are making progress as an alternative for many digital music consumers."
Despite the marginal success of pay music services, the NPD Group notes these services still have challenges ahead of them.
"At the same time, consumers are somewhat confused by perceived restrictions on what they can do with the music they purchase and download. They are also concerned by the price of the services. As a result only 55 percent of consumers who tried legal services came back for more in subsequent months. By comparison, 85 percent of peer-to-peer (P2P) users engaged in repeat usage in 2004."
Price may also continue to be a concern if interim New Jersey Governor Richard J. Codey gets his way. The Governor is proposing an amendment to New Jersey's state tax laws that would charge 6% sales tax on each download. In addition, many other states are considering similar admendments.
That would equate to approximately 6 extra cents per download. Raising the price per download would erase the psychological advantage 99 cents represents, and perhaps arrest the growth pay services are witnessing.