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Digital music to overtake physical sales by 2011

May 7, 2007

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Digital music sales will overtake physical sales in Western Europe by 2011, concludes a new research from the analyst firm Berg Insight.

According to the report, this year alone, digital sales are going to account for 10 percent of total music retail revenues and continue to grow throughout 2008. It is also estimated that rapidly increasing digital sales will offset the decline in physical sales and push the European music market back into growth from 2008. The total European music retail value is expected to grow at an annual compound rate of 6.5 percent from € 8.5 billion in 2007 to € 11.6 billion by 2012.

A Mobile Tracking Study, published last year by comScore Networks, suggested that Europeans are much more likely to use their mobile for online purposes than Americans. This may go part way in explaining the growth of digital music sales in European countries.

“Music-enabled handsets already outsell portable music devices massively,” said Hanna Hallberg, telecom analyst at Berg Insight.

“We expect that the handset is going to become the primary portable listening device. Once consumers are provided with unhindered mobile internet access, these devices will increasingly be utilised for accessing online music content.”

The report supports the notion that existing digital rights management (DRM) schemes are dissuading consumers from using legal music downloading services and underlines the importance of the ability to get dual delivery to PC and mobile handsets.

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