Who’s Number Two? Three? Researcher Starts Counting Benjamins

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The iTunes Store is unquestionably the top seller of online music.

But a shouting match for second- and third-place supremacy is now taking place between eMusic, Amazon, Spiralfrog, and potentially others.

The drama began with a USA Today article that praised Amazon MP3 for “quietly” becoming “number two in digital sales,” though numbers were glaringly absent from the report.  That prompted a reaction from eMusic chief executive David Pakman, who reclaimed the second-place ranking and showed numbers to back his claims.

Then, ad-supported download destination SpiralFrog claimed a number-three ranking, based on registered user totals of roughly 850,000.

So who’s right?  “From our perspective, money is what counts,” said Mark Kirstein, a former analyst at In-Stat and iSuppli, and currently head of MultiMedia Intelligence.  Kirstein compiled a ranking based on annual revenues, and found both Amazon and Spiralfrog in the basement.  “Amazon may be coming up now, but they certainly weren’t in the running in 2007,” Kirstein told Digital Music News.  “And Spiralfrog’s claimed registered user base of roughly 850,000 isn’t substantially monetized.”

But who are the top players?  Kirstein estimated annual music revenues of $1.8 billion at iTunes, $125 million at Napster, and $42 million at eMusic.  Others, including Rhapsody, Zune Marketplace,  and Musicload are all “sub-$40 million” according to the data.