Jupiter Research issued a digital music forecast (read press release) that says by 2011 digital music sales will account for 22% of all U.S. recorded music sales, or $2.5 billion. The forecasted digital growth rate is 16% compounded annually. "As detailed in our research, the music download business will remain a sampling medium for many users rather than a CD replacement," said David Schatsky, president of JupiterKagan.

Part of that $2.5 billion figure comes from subscription services. Jupiter sees a 32% compounded annually growth rate through 2011 from music subscription services. Card wrote that "on-demand subscription services will appeal primarily to niche audiences among music aficionados," just as they do now.

Before you do any math, read a blog post about the survey by Jupiter analyst David Card. He explains something the press release does not: Jupiter did not count ringtone sales as digital revenues. He wrote, "Digital music sales will total 22 percent of US consumer music spending in 2011, and ring tones another 12 percent." Combined with download spending, the adjusted digital figure is actually 34%. That leaves the CD with about 66% of the market.

I consider both ringtones and downloads (a la iTunes) to be digital. Major labels tend to group the two into one digital category when reporting earnings.

As a comparison, an iSuppli report predicts a global digital market of 40% by 2010 (ringtones included), which I think is too high an estimate. The IFPI forecasts a global digital share of 25% by 2010. EMI Music's Alain Levy believes his company will have a 25% digital share by 2010 (said at the October 2006 London Media Summit). According to my very rough calculations based on the given growth rate, Jupiter's 2010 forecast comes out to a 18% digital download share. That would put a combined download/ringtone number in the 27-29% range.