The global market for digital music will grow six times larger by 2010, according to the analysts at iSuppli, who expect it to reach a value of $14.9bn (£7.7bn).
The researchers expect both broadband services (like iTunes) and mobile phone music services to benefit from the growth, but also predict that competition between established digital music services will grow deeper, as mobile services try to seize a slice of the territory.
Analyst Mark Kirstein points out that the digital music market is made up of both types of service (broadband and mobile). Mobile services were, until now, driven by ringtone sales, but are now expanding into full-length music downloads.
Apple has generated a mass market for broadband music services, the research also claims.
While digital sales seem set for a compound annual growth rate of 40.7 percent from $2.7bn (£1.4bn) in 2005, sales of physically distributed music are expected to decline to $19.6bn (£10.1bn) by 2010 - down from $273bn (£141bn) in 2005.
The analyst believes that mobile services will be of more importance to labels as a result of the fall in traditional music sales, as labels will need to secure new revenue streams to compensate for lost CD sales.
"Music-enabled phones already out-ship MP3 players by a factor of 2 to 1," Kirstein said.