iTunes passes Amazon to become third largest U.S. music retailer

For the first quarter of 2007, the digital download service snagged nearly 10 percent (9.8 percent ) of overall retail music sales, placing it ahead of both Amazon.com and Target, which captured 6.7 percent and 6.6 percent, respectively.

Apple trails only industry leader Wal-Mart with 15.8 percent and runner-up Best Buy with 13.8 percent. By comparison, Best Buy's online music store, which is restricted to digital tracks like iTunes, garnered only a 1.1 percent market share.

NPD attributed Apple's gains to stellar iPod sales during the past holiday shopping season.

Upon last check in November of 2005, Apple ranked seventh on the list of leading U.S. music retailers, having then passed Tower Records, Sam Goody and Borders to crack the Top-10 for the first time.

According to NPD, digital music downloads during the first quarter of the year accounted for only 13.8 percent of all music purchases. The remaining 86.2 percent were sold in physical disc format.