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Digital music sales to pass £5bn in 2012, and overtake physical sales in 2015: research

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Worldwide digital music sales will pass the £5bn milestone in 2012, new research suggests.

And while sales of CDs and other packaged music products will still outnumber digital purchases of songs or albums by almost six to four this year, that trend will reverse by 2015 when digital sales will overtake physical sales of music, predicts Strategy Analytics in its latest Global Recorded Music Forecast.

The company forecasts that online streaming revenues will grow by 40% in 2012 to £696m, while income from online downloads will rise by 8.5% to £2.5bn. Adding to that sales of music over mobile phones (but not including ringtones), spending on digital will increase by 17.8% in 2012 to £5.5bn. At the same time, it predicts, physical sales will fall by 12.1%.

In all, says Strategy Analytics, digital music’s share of global recorded music spending will rise to 39% of the market in 2012, compared to packaged music sales, of 61%.

But by 2015, it forecasts, digital spending will overtake physical spending on music worldwide. In some countries, including the US, Sweden and South Korea, it says the balance will tip sooner.

Ed Barton, Strategy Analytics’ director of digital media, said: “Although downloads still account for nearly 80% of online music revenues, this market is maturing and spending is flattening in all key territories. Streaming music services such as Spotify and Deezer will be the key growth drivers over the next five years as usage and spending grow rapidly.

“Why? Because people are increasingly valuing accessibility and availability over actual ownership of digital music which, in turn, drives growth in streaming services which routinely offer instant access to over 10m tracks. Additionally, the emergence of cloud storage of a subscriber’s existing music library for seamless streaming to a range of connectable devices improves the value proposition further.”

In the UK market it predicts streaming revenues will grow by 41.9%, compared to 9.1% for downloads. Together these two areas account for 38% of UK music spending in 2012. Physical sales will fall in the UK by 30% in 2012, predicts Strategy Analytics, which expects that annual digital spending will overtake physical music sales in the UK in 2015.

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