• March 19, 2009

Purchases of online digital music downloads grew 29% last year and now account for one-third of all paid music tracks in the U.S., according to an annual digital music study by consumer research firm NPD Group.

At the same time, the number of Internet users paying for digital music increased by 8 million to 36 million. Those gains came at the expense of CD sales, which saw a 19% drop in 2008 as the number of U.S. CD buyers fell by 13 million.

NPD also found evidence that music listening is growing, pointing to awareness of online radio service Pandora doubling to 18% of Internet users. Similarly, the percentage of those who say they listen to music on social networks climbed to 19% in the fourth quarter of 2008, compared to 15% in the year-earlier period. Nearly half of teens are using music on social networks, up from 37% a year ago.

"Just as music piracy and the advent of digital music ended the primacy of the CD, we are beginning to see new forms of listening challenge the practice of paying for music," said Russ Crupnick, entertainment industry analyst at NPD, in a statement. "The music industry now has to redouble efforts to intercept and engage these listeners."--Mark Walsh