NPD data (as reported in this Ars Technica article) suggests Amazon.com's MP3 download store is expanding the digital music market.

From NPD:

The fact that Amazon’s early growth does not appear to be at the expense of Apple iTunes is a healthy indication that the digital music customer pool can expand into new consumer groups who have not yet joined the iTunes community. Based on US CD sales, Amazon is among the largest sellers of physical music and boasts a substantial and loyal buyer base—many of whom may not be in the iTunes market sweet spot.

NPD noted that iTunes and Amazon.com's demographics differ and only ten percent of Amazon.com users had previously bought music through iTunes. There are other demos that iTunes has not reached very much. Its percentage sales of country, R&B, hip hop and Latin are well behind its strengths in indie rock, soundtracks and classical. For competitors, the laggards represent opportunities.

Dropping DRM was the right thing to do, and this NPD report offers proof. Not because it was going to instantly save the record industry, but because it would allow the market to grow, encourage new stores and services and entice entrepreneurship that had previously cringed at the thought of protected Windows Media files.