The CD will remain the most popular format for music for at least another five years, according to analysts at Jupiter Research.
According to Jupiter the CD will continue to dominate mainly because more people have CD players than MP3 players.
Jupiter predicts that in 2009 European music fans will spend €836 million ($1 billion) on digital music downloads and subscriptions. This will still only account for 8 per cent of Europe's estimated €10.2 billion music market.
Analyst Mark Mulligan told Reuters: "Although Europe's digital music market has finally begun to take off after a sluggish start, it will remain a relatively niche market. Digital music distribution will be an important alternative revenue channel for the music industry, but it is not about to replace the CD."
Last month Forrester Research forecast that the Western European digital music market would be worth €3.5 billion – or 30 per cent of the overall European market – by 2009.