iTunes: America's Favorite Music Store

In fewer than five short years, Apple has managed to whomp the entire music industry. The iTunes online store sold more music in January and February than any other U.S. retailer, including second-place finisher Wal-Mart, according to a report from the NPD MusicWatch.

Even though Wal-Mart and also offer digital music in addition to CDs, they weren't able to compete with iTunes. Apple sold 19% of all music in January.

With nearly 30% of all music sales coming from digital downloads, it seems like pricey compact discs merely weigh a retailer down. Almost half of teenagers in the U.S. did not buy a CD in 2007. Instead, they carefully selected individual 99 cent tracks from iTune's selection, using money that probably came from a holiday gift card.

A physical CD is one of the only ways to obtain a high-quality audio track these days, but one year ago Apple introduced 256 kbps tracks into the iTunes store. They're less "lossy" than run-of-the-mill Mp3s, but it is unclear whether sales of these $1.29 tracks helped Apple sell more music to audiophiles who prefer to rip music directly from discs. Odds are those higher-quality tracks weren't much of a factor, considering the fact that they can only be played on iTunes and iPods. Have you failed to participate in iTunes' windfall because of the low quality formats the store sells? -Rachel Rosmarin