New York - Digital music spending in the U.S. is expected to reach $2.5 billion in 2011, when it will account for 22% of total U.S. music spending, according to a report from market research firm JupiterResearch.

The firm noted that digital sales will not compensate for lost CD sales over the next five years, nor will they return the overall industry to growth.

"Strong hints of digital substitution -- consumers buying digitally instead of buying CDs -- are finally appearing among early digital music users," said JupiterResearch senior analyst David Card. "Last year we witnessed downloads growing over 30 percent, to over $800 million and subscription services grew 14 percent, to over $185 million."

Spending on digital downloads will grow at a 16% compound annual growth rate over the next five years, while subscription services will grow at a 32% rate, JupiterResearch predicts.

"The music download business will remain a sampling medium for many users rather than a CD replacement," said JupiterKagan president David Schatsky.

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