Apple’s iTunes digital media store has beat out Best Buy and Target to become the second largest music retailer in the United States. Wal-Mart is still number one according to data released today from the tracking firm NPD Group.

Sales made in 2007 show that legal music downloads account for 10% of all music sales in United States. But an increase of download sales hasn’t been enough to offset a decline in physical CD sales, NPD said. Digital sales rose 6% but actual spending across the industry declined by 10% because of poor CD sales.

Around one million consumers stopped buying CDs in 2007, according to NPD.

Apple’s iTunes store has over 50 million customers and has sold more than 4 billion songs since its inception.