Port Washington, N.Y. - The amount of music that consumers acquired in the U.S. increased by 6% in 2007, but a sharp spike in digital download revenues could not offset declines in CD sales and the market saw a net 10% decline in music spending for the year, according to data from market research firm NPD Group. The firm also estimated that one million consumers dropped out of the CD buyer market in 2007 -- a flight led by younger consumers -- as 40% of U.S. teens said they did not purchase a CD in 2007, compared to 38% in 2006.

NPD found that Internet file-sharing of music reached a plateau of 19% of the U.S. Internet population last year, although popularity among teens has continued to grow aggressively, and the number of files downloaded per user has increased.

Legal downloads now account for 10% of music acquired in the U.S., as evidenced by the fact that Apple (NASD: AAPL) is now the second-largest music retailer in the country, according to NPD data.

Legal download services like the iTunes Store attracted 29 million consumers in 2007, an increase of 5 million over 2006, with sales growth largely driven by consumers ages 36 to 50.

"The continued growth in legal download sites is encouraging, yet the industry struggles to improve the value of each digital customer," said NPD analyst Russ Crupnick.

"With so many baby boomers and gen-Xers entering the market, there are certainly opportunities to sell more digital albums, promote older catalog titles, or create bundles that will raise revenues. In the near term that's going to be the best means available to narrow the gap on dwindling CD revenues."

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