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Digital music revenue overtakes physical formats in U.K. for first time

Dan Graziano
June 2nd, 2012 at 2:38 PM

Digital music downloads and streaming revenues for the first time ever have surpassed those of physical CDs in the United Kingdom, according to the British Phonographic Industry. Digital music accounted for 55.5% of U.K. music revenue between January and April of this year compared to 31% of worldwide industry revenue in 2011, with industry revenues growing by 2.7% to £155.8 million. Digital music revenue, including subscription and ad-supported services, grew by 23.6% year-over-year to £86.5 million, while revenue from physical formats fell by 15.1% to £69.3 million. Sales of digital albums increased by 22.7% to £35.9 million. Paid-for subscription services revenue almost doubled over the same month a year ago, increasing 93% to nearly £9 million, while revenue from ad-supported services such as Spotify increased by 20% to £3.4 million. The continued increase of digital revenues highlights the switch millions of users continue to make from physical music formats to digital downloads and streaming services. The British Phonographic Industry’s press release follows below.

Digital Revenues Overtake Physical in UK Recorded Music Market, 31 May 2012

• Digital accounted for 55.5% of UK trade revenues in Q1 2012 – overtaking physical for first time
• Year-on-year record industry revenues grow by 2.7% to £155.8m in Q1 2012

A diversified revenue base and strong growth in a la carte albums sales and paid subscriptions meant digital music represented the majority of record industry revenues for the first time during Q1, 2012, new figures revealed today by the BPI confirmed.

Digital music revenues accounted for 55.5% of record industry revenues in the first quarter of the year. Impressive growth in digital music revenues boosted the record industry’s overall market value by 2.7% to £155.8m, offsetting a decline in revenues from physical products.

Digital income from all sources including à la carte, subscription and ad-supported services grew year on year by almost a quarter (23.6%) in Q1 to £86.5m. By contrast, revenue from physical formats fell by 15.1% to £69.3m.

Sales of digital albums contributed substantially to rising digital revenues, with the format’s sales increasing by 22.7% to £35.9m, outstripping revenues from downloads of single tracks for a second successive quarter.

Paid-for subscription services also performed strongly with income almost doubling (93%) year-on-year to just under £9 million as users migrate to premium, paid-for tiers. The ad-supported tiers of digital services such as Spotify and We7 raked in revenues of £3.4m, an increase of 20% on Q1 2011.

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