iTunes Accounts for 28 Percent of U.S. Music Sales, Amazon Catches up to Walmart

According to new numbers from the NPD Group, Apple's iTunes extended its lead over Walmart and now dominates the online music scene with a 70 percent share of the digital music market, while sales accounted for 28 percent of all music purchased during the first quarter of 2010.

Walmart sits it in a distant second place, a position it now shares with Amazon, which was able to gain 4 percentage points to tie Walmart with 12 percent of the market.

"Amazon's growth reflects a stronger position in both the CD and digital formats," Russ Crupnick, vice president of industry analysis for the NPD Group, said in a statement. "This dual-pronged approach of selling both digital music and CDs helps attract the most valuable and committed music buyer who prefers access to both formats."

Walmart held the top spot in physical CD sales with 17 percent of the market, though CD sales in general are declining. Digital music, meanwhile, made up 40 percent of the market in the first quarter of 2010, up significantly from 5 percent during the same quarter one year ago.

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Amazon last year launched its Kindle Pilot Program, in which it sold a number of Kindle DX readers to several universities at a 50 percent discount. Students were allowed to use them free of charge, but as it turns out, most college students aren't yet ready to trade in their textbooks for Kindles.

At the University of Virginia, for example, about 80 percent of MBA students who participated in the program said they wouldn't recommend the Kindle DX for classroom use, even though they enjoyed it for recreational reading. And at Princeton University and Reed College, students said they missed the ability to write in the margins, easily highlight passages, or view color charts and graphics, the Seattle Times reports.

"You don't read textbooks in the same linear way as a novel," said Roesner, a 23-year-old graduate student. "You have to flip back and forth between pages, an the Kindle is too slow for that. Also, the bookmarking function is buggy."

The complaints haven't fallen on deaf ears. Amazon last month announced software upgrades that enable Kindle users to sort books into collections and zoom PDF documents.

"The pilot programs are doing their job -- getting us valuable feedback," said spokesman Drew Herdener.

Feds May Investigate Apple for iTunes Antitrust Violations

Apple's recent success is continuing to attract attention from federal antitrust authorities. Sources familiar with the matter are saying the justice Department is starting a preliminary inquiry into anti-competitive practices in Apple's iTunes music store. The investigation will reportedly focus on Apple's ability to influence marketing decisions in the recording industry.

The event that may have precipitated this preliminary action occurred in March, when Billboard Magazine claimed Apple was pressuring music labels to stop taking part in Amazon's promotional deals. Apple was allegedly threatening to withdraw marketing support from labels that worked with Amazon. Another contributing factor is that Apple actually hold more of the music sales market than most people realize. Of all sales (digital and physical), Apple controls 28% of them. In just digital downloads, Apple has a 70% market share.

With this, and the recent investigation of Apple's new iPhone developer agreement, it's clear federal authorities are watching the Cupertino company more closely than ever. Do you think Apple's behavior is ant-competitive?

Rumblings at Amazon About Tablet-esque Features for the Kindle

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The initial reaction to the iPad has been mixed. But the mixed reaction hasn't necessarily soothed any nerves among its potential competitors. The fractured response means that they will have to wait a bit longer to take stock of the challenge. From the looks of it, Amazon is not awaiting the public's final word on the iPad to post its reply. After all, the iPad is supposed to be Kindle's sternest test till date.

A few days after Amazon was reported to have acquired touch screen company Touchco, the New York Times has unearthed at least 50 job listings on Amazon’s Lab126 career board that all seem to be pointing towards a Kindle equipped with a color screen, multitouch and Wi-Fi. The “Hardware Display Manager,” according to one of the job postings, must have "significant exposure to high volume manufacturing environments; you will know the LCD business and key players in the market."