CANNES, France -- It's ten years into the digital music revolution started by Napster, but what has the music industry to show for it?

Sales of digital singles have not yet made up for the lost revenue created by falling CD sales, which still represent the bulk of label revenue. Digital, for its part, has not done as much as it could to replace the CD as the primary music format. And unauthorized digital music services have not significantly impacted the continuing problem of piracy.

That's the sobering assessment given by Forrester Research analyst Mark Mulligan here during a MidemNet keynote.

"We're at an impasse," he said. "We're on the verge of one of the most worrying phases of the digital music space."

That phase is what many here feel is a transition from the download model that has defined the past decade to a streaming, cloud-based model they see as the future. And their concern is that too much attention is being given to fixing the problems of the flattening download market rather than proactively preparing for the streaming future.

According for Forrester Research data, the 12-15-year-old market -- what he calls "digital natives" -- Interacts with music primarily on mobile phones and YouTube, both streaming models. The 16-24 year old market -- or the "transitional generation" -- are those who did all the iTunes and BitTorrent downloading for the last 10 years. And the 25 and older crowd --the "analogs" -- are still listening to radio and buying CDs.

The analog crowd is currently paying the music industry's bills, but at a lower and lower threshold. The transitional generation are well-served by iTunes, but not making up for lost revenues. So it's the digital natives whose needs must be met for the music industry to grow. And today, they're not coming close to that goal.

"Current digital music products are still only transitional," said Mulligan. "The divergence of consumer behavior and existing products is widening at an alarming rate."

He likens today's digital music services to the first automobiles --which basically looked like horse-drawn carriage but with engines. It took decades for the automotive industry to create new vehicles designed as a whole new product rather than a shadow of the former.

The fear, as outlined by earlier keynoter Terry McBride of Nettwerk Music Group, is that a rogue service could emerge that does for streaming services what the original Napster did for downloads if the music and tech industries can't agree upon a workable, authorized solution.

"In five years, downloads will be over or generational," said McBride. "The music business needs to get moving and start to understand how this is going, or some kid is going to create an app where the artist doesn't share in the revenue generation."

"We're at a stage now where disruptive behavior needs to be embraced," echoed Mulligan. "It's time to embark upon ambitions, aggressive disruptive strategies of your own. Make no mistake, this is another Napster moment."

However other than outlining a few rather obvious elements of what a successful streaming music service of the future must look like -- a social element, interactive features, connected, etc -- there were few specific solutions provided.

Sure, it's a fragmented market, and sure a great digital music service would be one that incorporates all elements of search, discovery, interactivity, social and more, but how reasonable is it to expect a single magic bullet or one company to prevail in all areas equally well? One insightful suggestion was for the disparate services to work better together, such as how Pandora links directly to iTunes.

The closest suggestion to this was a rather roundabout way of saying that labels should ease off the cost of music licensing, for two reasons: First is that the cost of licensing music is such that most investors won't fund the companies seeking it for fear of the inevitable failure. The second is that in the future, the experience of the music will become more important than the music content itself, which then makes the music less valuable.

"Content has no value," said McBride. "It's the context that's the value."

In other words, its all the features built around the music that will make or break the digital music service of the future, not the catalogs they have access to. Of course it needs that content for the experience to have any meaning.