On occasion, the NPD Group publishes a study on the current state of digital distribution, whether from P2P or authorized sources such as iTunes. In June 2005, the NPD Group published a study which suggested that authorized music distributor iTunes was nearly as popular as most P2P networks. In fact, the title of the study was dubbed, "iTunes More Popular Than Most Peer-to-Peer File Sharing Services."

According to the study the only network more popular than iTunes was WinMX. By that time, WinMX was a mere shell of its former self. The conclusion of the study came under attack, as it excluded BitTorrent, the rising star of the file-sharing landscape. Additionally, during the summer months of 2005, iTunes had yet to transfer 1 billion songs - a feat easily accomplished by the file-sharing community in weeks.

In a new study published today, the NPD Group has once again revisited the iTunes/P2P scene, and will no doubt receive some – albeit less - criticism from the file-sharing community. According to NPD's latest study, paid downloads are gaining on "illegal" P2P downloads - and at a high rate.

"Legal a la carte downloads were the fastest growing digital music category in 2006, and it is likely that the annual number of legal users will surpass P2P users in 2007," said Russ Crupnick, vice president and entertainment industry analyst for The NPD Group. "Unfortunately for the music labels, the volume of music files purchased legally is swamped by the sheer volume of files being traded illegally, whether on P2P or burned CDs sourced from borrowed files."

Very interesting conclusion. The NPD's first study (June 2005) on the issue occurred about six months before iTunes sold 1 billion songs. As reported in January of 2007, iTunes had just crossed the 2 billion song threshold. In that period of time, about 1.5 years, untold billions of files managed to transfer across the Internet. While "legal a la carte downloads" may be the fastest growing, they would have to increase at a geometric rate if they have any chance of closing the gap on P2P.

Another portion of the study found that 2006's P2P population had grown from 2005, but at a slower rate from previous years. Although the growth rate had slowed, the number of files shared in 2006 had increased by a stunning 47%.