iTMS Now Accepts PayPal; 5 Free Songs for New Users [UPDATED]

Apple and PayPal today announced the U.S. iTunes Music Store (iTMS) can now accept PayPal for all iTMS purchases. Apple also announced that the first 500,000 people to open new iTMS accounts using PayPal to fund the account will receive five free songs.

PayPal is an Internet-based payment system initially developed for eBay auction payments, but soon branched out to facilitate Internet-based cash transfers for any use. eBay bought the company in July of 2002, and incorporated the payment features directly into its auctioning process.

"We are thrilled that PayPal users can now buy their music on the worldis number one online music store," said Todd Pearson, general manager of PayPalis Merchant Services, in a statement. "PayPalis virtual wallet offers iTunes customers the convenience of paying in the way they prefer."

The market

This is one instance where Appleis iTMS is actually following in the footsteps of Napster, which announced PayPal integration earlier this year. From a market standpoint, however, iTMS is the bigger coup for the company.

"iTMS is definitely the biggest," Sara Bettencourt, a spokesperson from PaylPal, told The Mac Observer (TMO). "Weire really excited about working with Apple, as [the iTMS] has the biggest share of the download market."

Apple controls about 70% of the legal music download business.

Neither PayPal nor Apple will say whether or not a PayPal option will be coming to iTMS users outside of the U.S. PayPal told TMO that it has some 56 million world wide, but would not break down that user base in terms of national demographics. Company spokesperson Bettencourt did tell us, however, that some 70% of its Q3 2004 revenues were U.S.-based, with the remaining 30% coming from international business.

The PayPal option at the iTMS allows users to use either a credit card, direct payment from a confirmed bank account, or a stored account balance to pay for their music.

You can find more information about PayPal at the eBay subsidiaryis Web site.