Apple: iTunes now the biggest music retailer in US

Thanks to a spike in post-holiday sales, Apple's iTunes online store outsold long-time top music retailer Wal-Mart in the United States during both January and February, the company said Thursday.

Research firm NPD has been tracking the meteoric rise of iTunes among music retailers since it broke the top ten sellers in the third quarter 2005. It entered the rankings at number seven behind Circuit City, FYE, Amazon.com, Target, Best Buy, and Wal-Mart.

Data from NPD, which tracks retail sales in the US, showed that by the first quarter of 2007, iTunes had upset all but Wal-Mart and Best Buy, establishing a comfortable position in third. The margin between third and second place represents the largest gap in the rankings.

Then, citing NPD data again in February of this year, Apple claimed its iTunes store was number two in music sales in 2007, selling over 200 million songs on Christmas Day alone.

These holiday sales enjoyed a surge in January 2008, when iTunes gift cards were presumably being cashed in. Though Apple presents no gift card redemption figures to substantiate this claim, the holiday gift card spike is a trend well-known among retailers.

It was during one of these spikes that iTunes finally ranked higher than Wal-Mart, garnering a 19% share of music sales over the discount retailer's 15%. According to the company, it was able to hold that top spot during January and February. Apple has sold 4 billion songs through iTunes and counts over 50 million customers.

"The iTunes Store became the largest music retailer in the US based on the amount of music sold during January and February 2008," Apple said in a press release Thursday, stating that the claim was "Based on data from market research firm the NPD Group's MusicWatch survey that captures consumer reported past week unit purchases and counts one CD representing 12 tracks, excluding wireless transactions."

Also breaking into the top ten with 1% of the market on its side was Real's Rhapsody, which could conceivably grow even larger thanks to recent partnerships with MTV, TiVo, Nokia and Reigncom, as well as with support from Yahoo.