Album sales in the United States - on CD and through legal downloads - fell by 4.9% in 2006, according to research company Nielsen Soundscan.
High School Musical, with Vanessa Hudgens, was the top US album
But the growth of digital music, especially the purchasing of individual songs, meant music sales rose by 19.4% overall, compared to the previous year.
Digital single-track sales were up by two-thirds, while twice as many digital albums were sold as in 2005.
The best-selling album overall was the soundtrack to High School Musical.
It accompanied a Walt Disney film and shifted 3.7m copies.
Releases by Rascal Flatts, Carrie Underwood, Nickelback and Justin Timberlake were also in the top five of the year.
But none could match the biggest album of 2005 - Mariah Carey's The Emancipation of Mimi, with nearly 5 million copies sold.
Billboard correspondent Brian Garrity said consumers were buying more single songs and fewer albums.
"At the end of the day, pop music is a singles-driven business, so why should I want to buy a whole album?" he said.
Justin Timberlake had one of the best-selling albums last year
Nielsen Soundscan noted that a digital song - Daniel Powter's Bad Day - sold 2 million copies in a year for the first time.
It added that 22 digital tracks exceeded one million sales for the year, compared with only two in 2005.
And artists such as Andrea Bocelli and Il Divo helped to give classical music the largest sales boost in any genre - a 22.5% increase last year.