UK digital music downloads and streaming revenues overtake physical formats for the first time

UK consumers are continuing to switch from physical music formats to digital downloads and streaming services, so much so that revenues from digital music surpassed those of physical sales for the first time in the first quarter of 2012.

This is according to the British Phonographic Industry, whose new report shows that digital music accounted for 55.5% of UK music revenues between January and April this year, as industry revenues grew by 2.7 percent to £155.8 million.

The BPI’s digital music revenues are based on downloads, subscriptions and ad-supported music services, which when combined saw nearly a 25 percent rise in income to reach £85.6 million. However, physical formats fell by 15.1% to £69.3 million.

In the US, digital music revenues exceeded physical purchases last year. In 2011, US digital music unit sales accounted for 50.3 per cent of all music purchases, eclipsing CD purchases and other formats for the first time in the world’s biggest music market.

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Today’s report marks a turnaround in music sales, after the BPI announced at the start of the year that whilst digital music revenues had grown 26.6% in 2011, the industry was still in decline.

BPI CEO Geoff Taylor said at the time:

“The UK has already fallen behind Germany as a music market. Unless decisive action is taken in 2012, investment in music could fall again – a creative crunch that will destroy jobs and mean the next Adele may not get her chance to shine on the world stage.”

Taylor’s tone has understandably changed following the industry’s return to growth.

Now, the BPI chief puts the success of digital music down to the willingness of UK record labels to embrace digital distribution channels, which encourages innovation and enables more new online and mobile music services to launch than in any other country.

Earlier this month, the music chart industry launched the UK’s first Official Streaming Chart, showcasing the most popular music from streaming services including Spotify, Deezer and other subscription platforms.