Music streaming services such as Spotify, Deezer are leading driving much of its sales growth during this year, according to new research.
The Global Music Forecast issued by Strategy Analytics found that digital music revenue worldwide will pass the £5 billion mark this year.
The on-demand services are predicted to generate £696m for the global music industry in 2012 – a rise of 40 per cent.
Strategy Analytics data indicates that on-demand music streaming is the fastest-growing sector of the industry, overtaking downloads, which are set to rise by 8.5 per cent this year.
While music downloads account for about 80 per cent of online revenue at the moment, the boom in retail downloads from sites such as iTunes is expected to “flatten out”.
Music streaming services – many of which are ‘free’, and derive their revenue through advertising – are expected to be the next big thing to drive growth in the music industry.
CDs and vinyl still dominate, accounting for 61 per cent of all music sold worldwide.
However, sales of physical products have dropped by 12 per cent globally, and 30 per cent in the UK.
As a result, annual digital spending is expected to overtake physical music sales in the UK in 2015.
The report, based on the first six months of music sales this year, saw a big contraction in music sales.
The BBC notes that total spending on music is predicted to fall by £190m, or 16 per cent in the UK this year, compared to 2.6 per cent globally.
Ed Barton of Strategy Analytics blamed the lack of “quality” new material from pop and rock’s biggest stars. “Maybe something will come along,” Barton added. “Even one of the compilations of songs from the Olympics ceremonies.”
Growth in online and digital streaming services has made it easier for Britons to buy music digitally compared to other countries, which could explain the switch to digital.
