Apple Still Has a Giant Advantage in Digital Music, With 75 Percent of the Market

There are a lot of places to spend money on digital music, but all of them are dwarfed by iTunes.

If you spend any time at all thinking about the digital music business, you know that already. But it’s good to see it spelled out, courtesy of Asymco analyst Horace Dediu and Billboard’s Glenn Peoples.

Dediu, incorporating new numbers released from Apple yesterday, pegs iTunes music spending at $6.9 billion a year. Peoples, riffing off numbers provided by the music industry’s international trade group, pegs total consumer spending on digital music at about $9.3 billion a year.

In other words, Apple owns about 75 percent of the digital music market. Leaving the rest for a group that includes subscription services like Pandora, Deezer, Rhapsody and assorted retailers like Amazon.

That domination shows you why the music labels are still very eager to see anyone and everyone compete with Apple, as long as they can pay up for advances/royalties.

Conversely, the fact that Apple no longer has the digital music market entirely to itself, as it used to at the beginning of the iPad era, shows you why Apple is watching the advance of competitors like Spotify with a wary eye.

Apple doesn’t worry about making money from digital music, but it does benefit mightily from music’s lock-in effects. Or at least it used to. The more that platform-agnostic rivals like Spotify grow, the weaker that lock gets.