NEW YORK (Bloomberg) — Apple Inc.'s iTunes digital music store rose to third place in US music sales in the first quarter with a 9.8 percent share of the market.Apple moved up two places to third behind first-place Wal-Mart Stores, which had a 15.8 percent share, and Best Buy, with 13.8 percent, according to Port Washington, New York- based NPD Group.

The gain reflects the growth of online sales in the music industry. Downloaded singles rose 60 percent to 586 million last year, according to the Recording Industry Association of America. Music sales overall, including compact discs, fell 6.2 percent to $11.5 billion from $12.3 billion in 2005, the association said.

"Physical CD sales have been struggling," NPD analyst Russ Crupnick said in an interview. "Apple continues to do an outstanding job in the digital space. In essence, they own it, between iPod and iTunes."

ITunes, which sells songs for download over the Internet, has moved up two spaces in the rankings since NPD last examined sales in mid 2006, Crupnick said.

CD sales shipped to retailers fell 13 percent during the year, the association said in April.

Among other music retailers, Amazon.com was fourth with 6.7 percent of sales. Target was fifth with 6.6 percent.

Shares of Apple fell 90 cents to $123 at 4 p.m. New York time in Nasdaq Stock Market trading on Friday. They have climbed 45 percent this year.