A JupiterResearch report, entitled US Music Forecast 2006–2001, suggests that digital download spending will grow at a 16 percent rate compounded annually over the next five years, while the smaller subscription service business will grow at a 32 percent rate.
"Strong hints of digital substitution, where consumers buy digitally instead of buying CDs, are finally appearing among early digital music users," said David Card, vice president and senior analyst at JupiterResearch.
"Last year we witnessed downloads growing over 30 percent to over US$800m, and subscription services growing 14 percent to over US$185m."
JupiterResearch also predicted that digital sales will not compensate for lost CD sales over the next five years, nor will they return the overall industry to growth.
Combined digital music sales will total 22 percent of US consumer music spending by 2011.
"The music download business will remain a sampling medium for many users rather than a CD replacement," said David Schatsky, president of JupiterResearch.
"For the next several years, on-demand subscription services will appeal primarily to niche audiences among music aficionados."
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