The sale of digital music will overtake CD sales by 2011, according to research from telecoms analyst firm Berg Insight.
The firm claimed that by the end of this year digital music sales via the internet and mobile devices will have accounted for 10pc of total revenue in the music retail industry in Europe.
It also estimated that the total European music retail value is expected to grow at a yearly rate of 6.5pc, from €8.5bn in 2007 to €11.6bn by 2012.
In 2005, 353 million tracks were downloaded by US music fans compared with only 62 million downloads in Europe.
A Mobile Tracking Study, published last year by comScore Networks, suggested that Europeans are much more likely to use their mobile for online purposes than Americans. This may go part way in explaining the growth of digital music sales in European countries.
“Music-enabled handsets already outsell portable music devices massively,” said Hanna Hallberg, telecom analyst at Berg Insight.
“We expect that the handset is going to become the primary portable listening device. Once consumers are provided with unhindered mobile internet access, these devices will increasingly be utilised for accessing online music content.”
However, the report also suggested that existing digital rights management (DRM) schemes are discouraging consumers from using legal music downloading services.
DRM policy throughout the music industry varies widely depending on the individual download service.
Apple iTunes originally only had a DRM model, known as FairPlay, which restricted the amount of copies a user could make of their downloaded track.
However, last month Apple struck a deal with EMI to provide its back catalogue DRM-free at an increased price per track, leaving the rest of its tracks subject to the original DRM model.
Other online music stores such as Napster and Yahoo! Music unlimited allowed users to download an unlimited amount of tracks via subscription but don’t allow access to these tunes once the subscription lapses.
Depending on the service and the type of subscription, DRM restrictions vary widely, making it confusing for purchasers to know the extent of what they actually get for their money.
By Marie Boran