The Age article on CD sales in Australia with some great stats:

• 8% increase in volume of wholesale physical "music products" but 5% fall in revenue (due to heavy discounting)
• Sales of CD singles has almost halved (album volumes are up)
• Digital music sales up 300%, 250% increase in revenue
• Digital music 5% of Australian music market
• "album sales on digital are still not significant"

Looks like we could see the internet becoming the new singles market, eradicating CD singles almost completely, leaving record companies and retailers to focus on physical sales of albums and compilations.

Such an arrangement could solidify the differences and benefits of each market which would surely make it easier for both to coexist?

I can't see album sales taking off at all online. It looks to me that people who are happy to buy music online want to buy single tracks, and that those same people are buying full albums physically. But I'd think that because that's what I do.

It's probably worth noting the article reports on "physical music product" which I assume includes music DVDs, something that we don't yet have a digital market for.