Music companies eventually will settle on digital delivery players.

Digital downloading of music, now in its earliest stages, is predicted to hit $1.1 billion in annual sales by 2003, according to a report out Monday. Market research firm Forrester Research says independent record labels and the rise of portable devices capable of playing the widespread MP3 Internet sound files will lead the initial charge. Most major labels have resisted making popular artists available for downloading, citing fears of piracy. The report suggests that albums will give way to singles, compilations and small collections, dubbed "mini-titles." In a survey of 6,700 online users, 34% indicated they_d buy music via download, 27% said they wouldn_t, and 39% weren_t sure. Analyst Mark Hardie says digital piracy concerns voiced by major record labels are a "big smoke screen" to buy time for the labels to understand the market and make plans. In two to three years, Forrester says, top recording artists will be paid, as actors and athletes are, commensurate with what consumers are willing to spend. A top act might command $40 on the release date for a title, while little-known acts, available at any music portal, would get only $11. The report says music companies eventually will settle on digital delivery players (necessary to listen to downloaded sound files) from Sony Music (MagicGate) and Microsoft, which is to announce its audio format, MS Audio, Tuesday in Los Angeles.