This article is one in a series examining the Pali Capital report that showed paid music download growth is slowing.

Is it real?

I think so. It is not a short-term aberration. It is a trend that has covered well over a quarter.

It should not come as a surprise. The digital music hypergrowth of the past few years is over. The Apple phenomenon has run its course. The magical integration of style, simplicity, and software kickstarted the MP3 player industry in 2003, which in turn drove digital music sales. But 100%+ annual growth is not sustainable.

The Diffusion Group predicted this would happen a year ago. 2006 was called a transition year. MP3 player unit growth to new users would drop significantly to 35% with total penetration already reaching almost 50% of Internet households.