iTunes, Wal-Mart Dominate Music Sales

PORT WASHINGTON, N.Y. (TheStreet) -- Compact discs may soon go the way of vinyl, as digital-music downloads are expected to equal CD sales by the end of next year.

According to market-research firm NPD Group, digital-music sales now make up 35% of the U.S. market, up from 30% in 2008.

The winner in this transition is easily Apple(AAPL Quote), with its iTunes digital store selling more music than any other retailer in the country, including those that sell physical CDs. It's followed by Wal-Mart Stores(WMT Quote) and Best Buy(BBY Quote).

Apple's Magical Mystery Event

Apple owns 69% of the digital-music market, with Amazon.com (AMZN Quote) following in a very distant second place, with 8% of the business.

NPD, however, does not track music-subscription services, such as RealNetworks' Rhapsody.

"The growth of legal digital-music downloads, and Apple's success in holding that market, has increased iTunes's overall strength in the retail music category," Russ Crupnick, entertainment industry analyst for NPD, said in a statement. "But the importance of the big-box retailers shouldn't be dismissed, as long as the majority of music consumers continue to buy CDs."

At least for now, people are still buying CDs, which account for 65% of music sales in the U.S.

Wal-Mart is the top CD seller, with a 20% share in the U.S. Best Buy has 16%, while Amazon and Target(TGT Quote) each account for 10%, NPD said.

-Reported by Jeanine Poggi in New York.