updated 01:13 am EDT, Thu August 16, 2012
Streaming revenue growth outpaces downloads by 5x
Digital music revenues are forecast to finally excede physical media sales globally sometime as early as 2015, driven by strong growth from streaming services such as Pandora and Spotify, according to research firm Strategy Analytics. Spending on digital music, including downloads and streaming services, is expected to increase by 17.8 percent to $8.6 billion in 2012, as revenue from packaged sales drops by an estimated 12.1 percent.
"Streaming services will take over as the leading revenue growth engine for the music industry in 2012, generating an extra $311 million - $8 million more than downloads at $303 million," Strategy Analytics wrote in its latest Global Recorded Music Forecast.
The report suggests the growth pace of music downloads has begun to level off, though streaming revenues are increasing at nearly five times the rate of download revenues. Digital music in general is expected to account for 39 percent of all music sales in 2012, and certain countries, such as the US and Sweden, are set for digital to take the dominant position well before 2015.
The analysis echoes other reports that have circulated this year, including Pandora's first-quarter financial disclosures that pointed to $80 million in revenues for the first three months of the year. A separate report suggests Spotify is now the number-two revenue source for the major record labels, on track to fetch $889 in revenue for the year and eventually surpass iTunes sales if the growth rate can be sustained.
"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," said Strategy Analytics' Ed Barton.