Music sales predicted to decline

Digital revenues expected to increase

A new report from PricewaterhouseCoopers predicts that combined global spending on recorded music in all formats will fall from $33.4 billion worldwide in 2007 to $32.5 billion by 2012, a .6% compound annual decline.

Latin America and Asia are expected to see gains, driven mostly by digital formats, but declines in the U.S. and the rest of the world will offset that positive note, the report said.

Not surprisingly, digital formats are expected to explode in that time. Global spending on digital music formats is predicted to reach $18.8 billion by 2010, more than doubling the $7.3 billion last year, a more than 20% compound annual gain. Asia is expected to contribute $7.5 billion to the 2012 digital total, the U.S. $5 billion, Latin American $1 billion and almost $5 billion for the rest of the world.

PWC said digital revenue will overtake physical revenue in Asia by next year, Latin America by 2010, by 2011 in North America and in 2010 for the rest of the world.
Mobile will edge Internet-based distribution as the more lucrative channel, but the Internet will remain the fastest growing with a compound annual rate of more than 27% to $8.6 billion by 2012; mobile phones will grow by 16.7% to $10.3 billion. PWC said there were 361 million songs downloaded via mobile phone worldwide last year and expects that figure to grow about 4% to 373 million this year, and to 580 million by 2012.

In the near term, single-track sales remain the dominant component of digital sales, at $802 million, but album downloads increased by 54% in 2007 over the prior year. The company expects single downloads to grow to 1.9 billion a year by 2012 to $2.2 billion worldwide, while album downloads will rise to 120 million units a year to $1.2 billion.

The study predicts that tracks will cost more in the near future, to an average of $1.15 by 2012, while albums will average $10.15.