The iTunes Store is now the second-largest music retail outlet in the United States, at least according to a creative calculation by NPD Group.  The research company positioned Apple just behind Wal-Mart in total album sales, and ahead of mega-retailers Best Buy and Target.  That news was trumpeted by Apple, which reported sales of 4 billion downloads since May, 2003.  "We'd like to thank the over 50 million music lovers who have helped the iTunes Store reach this incredible milestone," said iTunes vice president Eddy Cue.

The ranking points to a quickly-shifting digital music marketplace, though labels are mostly losing this transition.  One reason is that consumers are shifting away from neatly-bundled albums, and into lower revenue, a-la-carte downloads.  The other is that most downloads are happening for free, outside of the iTunes Store.

For its album-based ranking, NPD Group counted 12 a-la-carte downloads as one album, an approach that glosses over the critical bundling aspect.  "It misses the real point, which is that labels lack a real bundling solution right now," explained one high-ranking label executive.  The issue is part of a larger credibility gap for NPD Group, often criticized for its flimsy music industry findings.  The NPD ranking was based on consumer-reported purchases, not retailer-supplied information, according to Apple.