Digital music sales continued to surge in 2006, with releases from Rascal Flatts, Daniel Powter, and the soundtrack of the movie High School Musical landing the top-selling releases of the year. But digital sales grew at a rate that has some industry watchers concerned over whether the digital boom can continue to prop up the overall music business in 2007.

According to 2006 data released today by Nielsen/Soundscan, digital track sales jumped to 581.9 million units in 2006, up 65 percent from 352.7 million in 2005. Digital album sales saw an even bigger jump in 2006, with sales of 32.6 million albums, up 101 percent from 16.2 percent in 2005.

The digital sales surge helped buffer the continued decline in overall album sales, which dipped 1.2 percent, from 654.1 million in 2005 to 646.4 million in 2006. But that dip and the digital sales tallies from the final week of 2006 has Wall Street analyst Richard Greenfield of Pali Research concerned.

In a research note sent out today, Greenfield points to digital track sales of 40.4 million units in the week after Christmas in 2006, up 46 percent over the same week in 2005, but paling in comparison to the 278 percent growth in the same week in 2005 over 2004.

"We are increasingly concerned that digital track sales will struggle to show 40 percent growth in 2007," Greenfield wrote. "If digital tracks increase less than 40 percent and physical CD unit sales decrease 7-8 percent again, we believe total industry album units could decline by more than our prior forecast of 0.8 percent. Therefore...we believe total music industry sales could struggle to be flat in 2007 (versus up about 1 percent in 2006)."

Despite Greenfield's concern, it was a banner year for several artists, with the soundtrack to the movie High School Musical landing the top-selling album in the country for 2006 with 3.7 million units sold.

Country trio Rascal Flatts was the year's top-selling artist with nearly 5 million units sold. The trio was also tops among artists in digital sales with nearly 3.8 million units sold, besting Nickelback, the Fray, All-American Rejects, and Justin Timberlake.

Daniel Powter's "Bad Day" was the top-selling track in the US with 1.94 million units, followed by Gnarls Barkley's "Crazy" with 1.63 million units and the Fray's "Over My Head" with 1.51 million. The Fray also had the year's top-selling digital album with 198,371 copies of How to Save a Life sold through digital stores.

Market share among the major labels remain largely unchanged from 2005, with Universal Music retaining the top slot at 31.6 percent and Sony BMG second at 27.4 percent. Among genres, rap and R&B saw 20.7 percent and 18.4 percent year-over-year sales declines respectively, while classically saw a 22.5 percent sales spike.

As for the last week of 2006, "Fergalicious" by Fergie was the top-selling track, with a record-breaking 294,000 downloads sold, topping D4L's "Laffy Taffy," which sold 175,000 copies in the same week of 2005.