Apple eats others

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An internal memo at Apple which was just intercepted by Ars Technica congratulates employees on having successfully swiped the #1 spot in music retail from Wal-Mart. This announcement comes barely a month after they announced that they had moved up to #2, suggesting a dramatic growth rate.

This is a coup of sorts in that a digital retailer has never before held the #1 slot, and also because the old guard of the record industry has been fighting with Apple since they started arguing over variable prices in early 2006. Wal-Mart was a mixed blessing of sorts for them -- they were able to get physical copies of popular albums to remote rural areas that didn't have a dedicated local record store, but they have long demanded censored alternate versions of albums with explicit content because of their "family values" and more recently had started to demand lower prices under threat of reduced shelf space.

Nevertheless, quite a few label folks were probably happy to see Wal-Mart stick around, because digital downloads are generally far less profitable than physical sales. One of the more unfortunate aspects of this situation is that we're not likely to see a strong effort from Wal-Mart to regain the title -- even though they're so important to the record industry, music sales are at best a secondary or tertiary source of profits. That would be good for consumers and give the labels still interested in physical retail a fighting chance, but if I were ol' Sammy Walton I doubt I'd so much as blink at this news.

The other surprising news was farther down the list -- Amazon's mp3 store has slipped to #4 despite several months of hype as the industry's Great White Hope in the fight against Apple, with Best Buy claiming the third spot as a result of holiday gift cards being redeemed.

Hopefully this will serve as a wake-up call to anybody who is still unwilling to sell music online. Get on it!


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