iTunes now #2 music retailer: is Steve Jobs playing Icarus?

The NPD group, a market research firm, reports that not only did legal downloads increase in 2007, they grew to the point where Apple is now only second fiddle to Wal-Mart in the distribution of music.

Legal music downloads now account for 10 percent of the music acquired in the US. Reflecting the growth in that sector of the market, Apple's iTunes Music Store became the second-largest music retailer in the U.S. after Wal-Mart, based on the amount of music sold during 2007 (based on a 12-track CD equivalency for music track downloads).

Twenty-nine million consumers acquired digital music legally, via pay-to-download sites last year, which is an increase of 5 million over the previous year. Sales growth was largely driven by consumers age 36 to 50 - a segment that was aggressively acquiring digital music-players in 2007.

"The continued growth in legal download sites is encouraging, yet the industry struggles to improve the value of each digital customer," said Russ Crupnick, entertainment industry analyst for The NPD Group.  "With so many baby boomers and gen-Xers entering the market, there are certainly opportunities to sell more digital albums, promote older catalog titles, or create bundles that will raise revenues. In the near term that's going to be the best means available to narrow the gap on dwindling CD revenues."

Seeing as their success as a retailer rests entirely on the goodwill of those who operate the network infrastructure, you really have to wonder why Apple is keeping their mouths shut on Net Neutrality. 

For their sake, I hope that no broadband provider wants to partner with Wal-Mart to deliver a music library via set top box. iTunes traffic might suddenly take up too much bandwidth and need to be "managed."

Here's the Wikipedia entry on Icarus, if you're not up on your Greek mythology:

Latin: ?karos, Etruscan: Vicare) is a character in Greek Mythology. Icarus' father, Daedalus attempted to escape his prison, the Labyrinth, in which he was imprisoned at the hands of King Minos, the king for whom he had built the Labyrinth (Labyrinth is derived from the Minoans word for a ceremonial axe). The Labyrinth's original purpose was intended to hold the horrible creature, the Minotaur, a beast that was a product of one of the King's mistress's affairs with a bull. The Minotaur was born to King Minos and his wife instead of a son because the Gods were angry at them. Daedalus was imprisoned on the island with his son Icarus. Daedalus, the master craftsman, was imprisoned because it was he who built the faux cow for the queen to climb into such that she could copulate with the bull. As the Minotaur grew up it became violent and dangerous, so they had to imprison it in the Labyrinth. Daedalus fashioned a pair of wings for himself and his son, made of feathers and wax. Before they took off from the prison, Daedalus warned his son not to fly too close to the sun, as the wax would melt, nor too close to the sea, as the feathers would become sodden. Overcome by the sublime feeling that flying gave him, Icarus soared through the sky joyfully, but in the process he came too close to the sun, which melted his wings. Icarus kept flapping his wings but soon realized that he had no feathers left and that he was only flapping his bare arms. And so, Icarus fell into the sea in the area which bears his name, the Icarian Sea near Icaria, an island southwest of Samos.^[1]

Think of Wal-Mart and any single telco as the sun...