By Philip Elmer-DeWitt
August 18, 2009

The NPD Group on Tuesday issued what at first appears to be a pair of contradictory facts:

  • Apple (AAPL) now controls the largest share of the music business, its iTunes Store accounting for 25% of unit sales in the first half of 2009, up from 14% in 2007.
  • Compact discs are still the most popular format for paid music, accounting for 65% of unit sales.

How can this be? The trick is that Apple controls the lion’s share — 69% — of paid downloads, whereas CD sales are spread out among many players, chief among them Wal-Mart (WMT), Best Buy (BBY), Amazon (AMZN) and Target (TGT).

To see better how this works, let’s put the data into pie charts:

Not covered in the NPD report, of course, is music piracy, which according to a recent U.K. report accounts for roughly 18% of music downloads — which would put it ahead of Amazon but well behind iTunes.

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