Streaming on track to become fastest-growing digital music medium

16 Aug 2012

By the end of 2012, global digital music sales will top US$8.6bn. Streaming revenues via services like Spotify and Deezer will grow at five times the rate of download services and are tipped to grow 40pc in 2012 to US$1.1bn, compared with download revenues which will grow 8.5pc to US$3.9bn.

Strategy Analytics predicts that streaming services will take over as the leading revenue growth engine for the music industry in 2012, generating an extra US$311m – US$8m more than downloads at US$303m.

Overall digital spending will increase by 17.8pc or US$1.3bn in 2012 to US$8.6bn, compared with a 12.1pc decline in packaged sales.

“Although downloads still account for nearly 80pc of online music revenues, this market is maturing and spending is flattening in all key territories. 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.

“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 more than 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.”

Decline of packaged music sales

Digital music will increase its share of global recorded music spending to 39pc in 2012; however, this is still much smaller than packaged music sales which will account for 61pc of spending.

Strategy Analytics forecasts digital spending will overtake physical on a global basis in 2015; however, some countries, such as the US, Sweden and South Korea, are making the transition to digital, taking the lions’ share of spending at a much faster rate.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years