New York - While digital music spending is expected to grow to $3.4 billion over the next five years, when it will account for more than a third of U.S. consumer music purchases, it will not compensate for lost CD sales anticipated during this period, according to a new report from market research firm JupiterResearch.

"That means digital music sales will not compensate for lost CD sales in five years," said JupiterResearch VP and research director David Card.

"Nor will they return the overall industry to growth. But digital's where the growth is."

The report projects that music downloads will replace CDs "for many -- but not most -- music buyers in five years," and on-demand subscription services will appeal primarily to niche audiences.

"The music download business will serve as an alternative, but not a replacement to CDs," added JupiterResearch president David Schatsky.

"One size does not fit all when it comes to acquiring music and consumer behavior toward the variety of formats available reinforces that claim."

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