US consumers will spend more on online music than CDs for the first time in 2012, according to a new study from Strategy Analytics.
The report "Global Recorded Music Market Forecast" found that total recorded music sales in the US declined by 7% to $6.2bn in 2010, driven largely by a 16% plunge in CD revenues, to $3.8bn.
The market research firm expects that in 2012 consumer spending on CDs will fall further to $2.7bn, more than $1bn lower than the 2010 level, while online music revenues will continue to grow, reaching $2.8bn, therefore passing CDs for the first time.
The report projected that while single track downloads will remain the single most important digital music revenue model, advertising and subscription models will gain in importance over the next five years.
Moreover, by 2015, online music revenues are expected to come from a mix of single track downloads (39%), album downloads (32%), subscription (14%) and advertising (14%).
Strategy Analytics digital media research director Martin Olausson said digital music is not developing as fast as expected, while online revenues will expand further over the coming years, the overall size of the recorded music industry will continue to contract as record companies struggle to identify growth strategies.
Strategy Analytics senior analyst Jia Wu said music companies must look beyond download-to-own for digital revenue growth and with rapid adoption of connected devices and ubiquitous broadband, music fans will expect greater flexibility and wider consumption choices.
