iTunes Gains Popularity As Online Music Brand, MySpace WanesiTunes Gains Popularity As Online Music Brand, MySpace Wanes

MySpace could have a perception problem when it comes to music, according to a new study.

In its "Tempo Digital Music Brandscape" study, announced Friday, Ipsos reported that MySpace has declined, alongside CD sales, while iTunes has gained strength over competitors as the dominant destination for digital music sales. The findings are based on a representative Web sample of 1,826 downloaders over age 12 from Sept. 10 through 17.

Ipsos released the findings one day after MySpace announced that it would sell music through an independently operated company, MySpace Music, in which three major recording labels will hold stakes.

MySpace has been home to millions of artists, who have used it mostly for promotion rather than sales and downloading.

The study found that total awareness of online music brands increased across the board in 2007. Eighty-two percent of all U.S. downloaders (paying customers and file-sharers) are now aware of iTunes, while 76% are aware of Napster, according to the study. Only 60% are aware of MySpace as a music destination.

Ipsos found a decline in perceptions of MySpace attributes and said it is "no longer as closely associated with allowing users to exchange ideas and recommendations," as it had been in previous years.

ITunes gained in aided and unaided awareness, with 38% of downloaders now saying the brand is at the top of their minds. Past-30-day usage decreased for Walmart.com and Rhapsody, while remaining stagnant for most music services, Ipsos said. ITunes saw an increase of 24% in past-30-day usage among all U.S. downloaders, an increase of 18% over 2006.

"It has become clear that iTunes' saliency has now reached beyond that of being just the top brand presence to being the pre-eminent brand in digital music," Karl Joyce, senior research manager for Ipsos Insight and author of the study, said in a prepared statement. "Even more telling than awareness and usage, iTunes' favorability clearly demonstrates the value of the brand. While perhaps distressing to some, iTunes' dominance simply cannot be denied."

Fifty percent of downloaders who are aware of more than one site for digital music consider iTunes the best digital music sales service, Ipsos found. That compares with 41% in 2006 and 33% in 2005. Napster is rated best by 10% of downloaders. That's the same as last year and still lower than Napster's high of 22% in 2005.

"ITunes' steady gain as 'best brand' over the past three years does denote a threat to other digital music services, particularly due to the persistent lack of interoperability," Joyce said. "While iTunes' growth in 2006 may have come at the expense of Napster, other brands have begun to feel its impact as well, including other top competitors such as Rhapsody and Yahoo Music. Moreover, social networking's hope of overtaking the lead in mainstream digital music acquisition appears to have fallen short."

Now, with Sony, Universal, and Warner on board to sell music through MySpace, that could change.

The Tempo study showed that music bundles, with multiple-track offerings, could hold untapped potential. Sixty-four percent of paying downloaders are interested in discounted multitrack offerings, Ipsos said. The study pointed out that higher-quality tracks without digital rights management are also in demand.

"Despite iTunes' dominance, the market continues to offer potential growth and inlets for competing brands," Joyce said. "Consumer expectations of digital music services have not changed all that much over the past several years, and one of the attributes that resonates time and again is price. Given the strong interest in discounted bundles, the critical question is not whether they should be offered, but what types of bundled discounts would encourage increased spending by would-be single-track downloaders without cannibalizing digital album purchase by others."