iTunes-purchased songs now account for 25 percent of the overall music market--both physical and digital--in the U.S., according to an NPD Group report released Tuesday.

NPD MusicWatch's report indicates that audio CDs remain the dominant format, responsible for 65 percent of all music sold in the first half of 2009.

However, digital music, which makes up the remaining 35 percent, is steadily gaining ground. According to the report, digital music sale is up from 20 percent of sales in 2007 and 30 percent in 2008.

The iTunes Store can claim 25 percent of all music sold in the U.S., according to the report, up from 21 percent in 2008 and 14 percent in 2007.

For the first half of 2009, iTunes itself claimed 69 percent share of the overall digital music arena, trailed far behind by with 8 percent.

The growth of legal digital music downloads, and Apple's success in holding that market, has increased iTunes's overall strength in the retail music category, said Russ Crupnick, entertainment industry analyst for NPD Group.