A new study from Forrester Research Inc. predicts that half of all music sold in the U.S. will be digital sales by the year 2011, with digital music surpassing the CD in 2012. The Massachusetts-based research firm says that digital music sales will increased with a compound annual growth of 23 percent over the next five years, bringing in $4.8 billion by 2012. However, CD sales figures will continue to decline to $3.8 billion by 2012.

"This is the end of the music industry as we know it," stated James McQuivey, VP and principal analyst at Forrester Research. "Media executives eager to stay afloat in this receding tide must clear the path of discovery and purchase, but only hardware and software providers can ultimately make listening to music as easy as turning on the radio."

Forrester adds that although major music chains such as Tower and Sam Goody have shuttered stores, when retailers like Best Buy and Wal-Mart give music less floor space, it will truly signal the end for CDs. The company also predicts that "experiments in ad-supported downloads will be silenced by the powerful combination of DRM-free music and on-demand music streaming on sites like imeem.com.:

McQuivey says that ad-supported Web music services are not the future and that ad-supported music should be "on the radio where it belongs." He also concludes that artists should be even more open to getting in bed with advertisers. "Artists who used to pretend that their platinum album success was really about their "art" will no longer have that luxurious pretense because labels won't sign them unless they agree to a barrage of sponsorship opportunities," McQuivey concludes. "There will eventually come a day when Chips Ahoy will contend with the Keebler Elves over who can be the official cookie of the Taylor Swift world tour."