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Gartner has released a report saying that the era of CDs as we know it is finally over. According to the report this year would be the last year for CDs to be a dominant retail audio format. The market share of digital media distribution is now slowly but surely tilting towards online distribution modes ala iTunes, Amazon MP3 store and other such offerings. In 2007, online distribution represented about 23% of revenue in US alone and about 15% worldwide.

Gartner wants the music industry to fully embrace the on-demand music distribution channels and thinks that the current reliance on CDs is hindering the music industry:

By propping up the CD business, rather than fully investing in online distribution alternatives, the major labels and the larger music industry have neither succeeded in stamping out piracy nor done much to recreate the business models of the old ‘record business,’” said Mike McGuire, research vice president at Gartner. “Music labels should instead emphasize ‘digital first,’ making all new releases and catalog issues via digital services and moving CDs to an on-demand publishing mode.