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) - Get Report

, 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) - Get Report

and

Best Buy

(BBY) - Get Report

.

Apple's Magical Mystery Event

Image placeholder title

Apple owns 69% of the digital-music market, with

Amazon.com

(AMZN) - Get Report

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) - Get Report

each account for 10%, NPD said.

-Reported by Jeanine Poggi in New York.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.