Digital Music Will Past By CDs in 2012 in the US

Posted by at 11:51 am on March 30, 2011

Digital music should overtake CDs in the US for the first time next year, Strategy Analytics said in a new study. It expected CDs to continue dropping a steep 40 percent from $3.8 billion in revenue for 2010 to just $2.7 billion in 2012. Digital, led mostly by iTunes, would keep growing and just edge past the physical medium to hit $2.8 billion.

Online music sales weren’t growing as quickly as expected by the labels, digital media research head Martin Olausson said, leading to the overall market shrinking from $6.2 billion last year to $5.5 billion in 2012. The analyst firm still saw digital music growing but believed labels would still “struggle” as they failed to understand how to latch on to digital.

Apple’s iTunes policies meant that direct downloads would still rule by 2015, with singles making up 39 percent of digital music, and 32 percent representing albums. Subscriptions like Rhapsody or the Zune Pass would still be the minority at 14 percent, while an upcoming Spotify US launch and other possible deals would carve out another 14 percent for free, ad-sponsored music. Labels had to consider subscriptions and other unlimited approaches if they hoped to see revenue grow, Strategy Analytics said.

Industry organizations such as the RIAA in the US and the worldwide IFPI have regularly said the drops in music revenue are only due to piracy. However, it’s also believed some of the drop is due to the decline of the album format.

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