Online shoppers around the world spent $5.6 billion on digital music last year, a 9.8% jump from $5.1 billion in 2011, according to a new report from the International Federation of the Phonographic Industry, a trade group for the recording industry. That growth rate compared with 6.3% in 2011 from 2010.
Consumers worldwide last year bought 2.3 billion digital single tracks, 9.5% more than the 2.1 billion they purchased in 2011. And they bought 206.8 million digital albums, a 16.6% increase from 177.3 million a year earlier.
The report also found that 20 million consumers worldwide paid for music subscription services last year, a 42.9% jump from 14 million in 2011. The trade group estimates that subscription services accounted for more than 10% of digital music revenues last year.
The growth of subscription services is providing an increasingly important revenue stream for record companies, the report says. “The subscription model has changed expectations for an industry long used to a payment model based on payment for songs sold,” says the report. “By contrast with downloads, subscription services pay a royalty every time a song is played.” Those royalties are typically smaller than those for downloads, the report notes, but they can add up.
Overall, music industry revenues reached $16.5 billion in 2012, a slight increase compared to $16.4 billion in 2011. That’s the industry’s first year-over-year growth since 1999, the report says. Digital music accounted for 33.9% of record company revenue, up from 31.1% in 2011.
“For the global music business, it is hard to remember a year that has begun with such a palpable buzz in the air,” says Frances Moore, the trade group’s CEO. That’s because of the rapid growth of digital music outlets. There are more than 500 licensed digital music services operating worldwide, the report says.
“Globalization is opening up new markets, with record companies now able to reach consumers in territories where there was little previous retailing infrastructure,” the report says. For instance, the report notes that last year the first digital music services launched in Kenya, Sri Lanka and Vietnam.