A pair of analyst reports measuring the digital music space paint a mixed picture for the future of the industry.

Looking back at last year, the NPD Group says music fans acquired more music in 2007 over 2006, but paid less for it. Overall, music acquisition increased 6%, but the portion paid for fell from 48% to 42%, for a net 10% decline in music spending.

NPD also estimates that 1 million people dropped out of the CD buyer market last year. The number of U.S. teens not buying a single CD during the year went from 38% to 48%.

So, where are they getting their music? P2P services primarily. The percent of Internet users who used P2P services plateaued at 19% last year, about flat with prior years, but the number of files being downloaded increased. The company did not provide exact figures.

Legal music downloads account for 10% of the music acquired for the year, with 29 million people buying music via a la carte download services. The growth largely comes from those aged 36 - 50.

Looking ahead, analysts still peg the mobile music market as a source of potential growth. Juniper Research says predicts the international mobile music market will grow to more than $17.5 billion by 2012.

The good news here is that this growth will come primarily from full-track downloads and subscription services, and less from ringtones-which has defined the space to date. Ringtones are expected to fall from 62% of mobile music revenues in 2007 to 38% by 2012.

Perhaps not surprisingly, the Asian region will drive the growth, counting for about 43% of annual sales over the coming 5 years.