The digital download store overtakes Wal-Mart as the biggest U.S. music seller.

By Michelle Quinn and Dawn C. Chmielewski, Los Angeles Times Staff Writers

April 4, LA Times

SAN FRANCISCO -- Apple Inc. has surpassed Wal-Mart to become America's No. 1 music store, the first time that a seller of digital downloads has ever beaten the big CD retailers.

Apple sold more albums in January and February than any other U.S. retailer, market research firm NPD Group said Thursday, underscoring how the music industry is on the front edge of a digital media shift that is upending businesses as diverse as bookstores and video game makers.

U.S. consumers still buy more CDs than digital downloads, but the gulf is narrowing rapidly. Only five years after launching its iTunes digital store, Apple has dominated the fast-growing download market so completely that it jumped ahead of individual CD sellers such as Wal-Mart, Best Buy and Target.

"It's a major milestone," said Tom Adams, president of consulting firm Adams Media Research. "It is the first instance of an electronic venue surpassing a [bricks-and-mortar] retail venue for any kind of media delivery."

Many industries are feeling the pain. Bookstores are shutting down, unable to compete with online sales and huge retail chains. Newspapers are laying off thousands of employees as advertisers and readers move to the Web.

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photo: Apple iTunes Gift Cards on display at Best Buy in Mountain View, Calif., Thursday, April 3, 2008 (Paul Sakuma / Associated Press)