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Apple's (Nasdaq: AAPL) online iTunes music store is now the No. 1 music retailer in the United States, according to the latest data from the NPD Group. To get there, iTunes had to beat out Wal-Mart (NYSE: WMT).
To date, Apple says iTunes has 50 million customers and has sold more than 4 billion songs from a catalog of over than 6 million choices.
iTunes, of course, sells digital downloads with both single and album options, while Wal-Mart sells physical CDs in its brick-and-mortar stores. The chain also has an online sales 
presence.
To get the comparison, the NPD Group's MusicWatch survey counts consumer-reported purchases and counts one CD as representing 12 tracks. The time frame covered by the latest ranking spans music sold during January and February 2008.
The Ranking
The NPD Group doesn't release its full data to the public, but here's the current ranking: iTunes, followed by Wal-Mart, Best Buy (NYSE: BBY), Amazon.com (Nasdaq: AMZN) and Target -- with Amazon and Target tied.
iTunes had a 19 percent share of the market, NPD Group said. The firm declined to publicly publish the remaining market share numbers.
Surprising New Leader?
"I don't know if it was terribly surprising," Mike McGuire, a vice president of research for Gartner (NYSE: IT), told MacNewsWorld.
"If you look at the last several months, there's two things happening here: Apple is continuing to grow, and I think people are just finding iTunes a convenient place to buy music, and the gift cards are having a tremendous effect -- I mean they are replacing air fresheners and cigarette lighters as the more popular thing you see at gas station check out stands," McGuire explained.
"Also, over this last year, we've seen Wal-Mart and some other big retailers decreasing floor space dedicated to CDs -- you're seeing retailers squeezing the amount of floor space they devote to music," he added.
Market in Flux
"The music market remains very much in flux," Susan Kevorkian, program manager for consumer markets audio research for IDC, told MacNewsWorld.
"This news reflects two key and related trends: Apple's position as the dominant online music destination, and an ongoing slowdown in U.S. CD sales. In terms of their music businesses, CDs account for the dominant share of Wal-Mart's and Best Buy's revenue today ... which means they're more exposed to fluctuations in the CD market," she explained.
"An equally important trend is that the major labels are now licensing DRM-free music downloads to online music stores, and those downloads are compatible with existing and new iPods. In addition, the majors are playing hardball with Apple today to get the company to offer tiered music pricing, and not all of the majors are offering DRM-free downloads to iTunes," she added, noting that these factors will give iTunes competitors a unique opportunity to make a play against iTunes.
As for Amazon.com, McGuire says that Gartner has long thought that Amazon.com would be the most formidable competitor to Apple in online sales.
"As more and more people find out about Amazon and make the transition to digital downloads as opposed to CDs, I would expect that Amazon will see a pretty nice bump -- but they have to keep investing in it," McGuire noted. "They've gotten what they've gotten [so far] with out a lot of promotion."
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