Digital music sales will overtake physical sales in the US before the year is out, according to data from Strategy Analytics. The growth of digital revenue is driven largely by subscription services, such as Spotify and Pandora, which have experienced rapid growth recently as downloads have started to level off.
Revenue in the US from streaming is set to grow at four times the rate of downloads in 2012, ending at $413 million to downloads' $2.2 billion. In the same time, physical sales will decline by 9 percent, or $304 million. Music downloads are still the meat of digital sales, but the recent surge in streaming revenue will push digital over the edge.
"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," writes Ed Barton, director of digital media for Strategy Analytics.
In the rest of the world, however, digital music has a longer road—its sales still won't overtake physical media globally until 2015. Around the world, physical sales are still shrinking (down 12 percent, according to Strategy Analytics) but online and mobile revenues have grown only 14 and 23 percent, respectively. The US, South Korea, and Sweden are all ahead of the digital music transition, and the format will dominate in those countries well before it conquers the globe as a whole.
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