According to the NPD Group MusicWatch report for the first quarter of 2007, Apple's online music store iTunes is now the third biggest music retailer in the U.S. What should surprise most people though, is that this report is not only limited to online sales but to physical distribution as well.

Surpassing iTunes is Walmart at first place, which is holding a whopping 15.8% share of the music market, and Best Buy at 13.8% picking up second place. iTunes currently holds a 9.8% share of music purchases at third place with Amazon.com trailing at fourth (6.7%) and Target at fifth (6.6%).

What makes this rather odd is the fact that 86.2% of the quarter's music sales were in CD format as compared to a 13.8% share in downloadable format. With iTunes only selling downloadable content, it's amazing that it reached the third place spot last January. Does this mean bigger and better things for iTunes in the future? We'll have to wait and see.