Streamed music, like streaming of movies and TV episodes via Netflix and other Internet-based services, is gaining momentum as a preferred way to listen to tunes.
About $3.4 billion of the $6.4 billion that consumers will pay for all music in 2012 will be for digital music, says a new report out today from Strategy Analytics. That means for the first time ever, the amount spent on digital music will surpass that spent on CDs and other physical formats.
Digital music -- streamed and downloaded -- is up from $2.9 billion in 2011, the firm says. Spending on physical music is expected to fall to $3.1 billion from $3.4 billion.
Most spending on digital music -- an estimated $2.2 billion this year -- will be for PC downloads from iTunes and other online retailers. But Spotify and other PC streaming services, which could bring in about $413 million in 2012, are growing at four times the rate of downloads, the report says. In addition, just over $750 million comes from downloads and music subscriptions used only on mobile devices.
Consumers are gravitating to "the Netflix model" for music, where they pay a monthly fee of $5 to $10 for access to a large virtual jukebox, says Ed Barton, director of digital media for the Boston-based research firm.
Services such as Spotify and MOG have free options, as well as $4.99 ad-free monthly plans for PCs and $9.99 monthly subscriptions that let you listen on your mobile devices.
Last year, the actual number of digital albums, tracks and other music units sold eclipsed the number of physical units sold for the first time, accounting for 50.3% of purchases, says Nielsen SoundScan.
New cloud storage systems from Amazon, Apple and Google are expected to help drive digital music.
"As that digital piece becomes a bigger share of the total consumption pie, the growth is starting to offset the slight softness in physical (CD sales)," says David Bakula of Nielsen.
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