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August 19, 2012

Worldwide digital music sales to increase 17.8% in 2012: report

Streaming music services such as Spotify and Pandora will drive the growth of digital music over the next five years

By CBR Staff Writer

Worldwide digital music, including mobile music revenue is expected to increase by 17.8% ($1.3 bn) in 2012 to $8.6bn compared to a 12.1% decline ($1.9 bn) in packaged sales, according to Strategy Analytics.

Online music streaming revenue is expected to grow at almost five times the rate of download revenues in 2012, recording 40% increase to $1.1bn, while download revenue will increase by 8.5% to $3.9bn .

According to the report, streaming services are expected to generate an extra $311m – $8m more than downloads of $303m in 2012.

The share of digital music is expected to increase its market share in the global recorded music spending to 39% during 2012, though it is far less compared to packaged music sales which will account for 61% of spending.

Strategy Analytics Digital Media director Ed Barton said streaming music services such as Spotify and Pandora will be the key growth drivers over the next five years as usage and spending grow rapidly.

"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," Barton said.

"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."

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The streaming revenues will grow at four times (27.8%) the rate of downloads (6.7%) in US, while the streaming revenues will record a 42% with a download rate of 9% in UK.

"Having stabilized long term revenue declines resulting from the downsizing of packaged music spending, the industry will be hoping that digital can rebuild the US music market to something approaching its former stature," Barton said.

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