Spotify-style services are now 15% of UK music market

Jonathan Weinberg

British music lovers streamed more than 3.7 BILLION tracks in 2012 as the popularity of online jukebox services soared and illegal filesharing fell.

Services such as Spotify move away from the model of 'buying' music altogether - with subscribers paying a subscription fee to access a library instead.

Streamed music hasn't overtaken downloads yet - but the numbers are rising, as users abandon illegal download services for new, cheap ways of buying music.

The average household streamed 140 songs in the past year - with the streaming market now worth more than 15% of  digital music industry income.

The numbers, part of a state of the nation report pulled together by UK music industry body the BPI, also show far less people are filesharing tracks illegally.

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A quarter of people purchased legal downloads or streamed content from one of more than 70 digital services available compared to just one in seven using peer-to-peer networks.

To date, there has been more than 114m albums and 938m single tracks sold as digital downloads with 30.5m digital albums sold in 2012, up 14.8% year-on-year.

Sixteen albums sold more than 100,000 copies on digital last year with a resurgence in the popularity of the single after 183.3m were shifted in 2012, a more than five-fold increase in 10 years.

Looking ahead, the research cites superfast 4G mobile broadband, the growth in tablet adoption and internet-connected car radios as reasons for even faster take-up of streaming n the next few years.

Geoff Taylor, BPI Chief Executive, said: "There has rightly been a lot of focus in the past few weeks on High Street music retail. That will continue - we must do all we can to serve music fans who love CDs and vinyl.

"But as well as great music stores, Britain is blessed with a world-beating array of digital music services, which fans rate very highly for ease of use and value for money.

"And this is just the beginning. Labels are striking innovative new deals with mobile networks, hardware manufacturers, app developers and start-ups.

"The music fan will be the clear winner, as digital services evolve to deliver even richer music experiences via superfast broadband and 4G to tablets, smart TVs and the next generation of in-car audio."

Other findings from the BPI's pulling together of a host of different surveys and reports for Digital Music Nation 2013 include details of how well-known the main streaming services are.

Four out of five people have heard of at least one with two-thirds able to name Spotify and Napster and a third pinpointing Just 13% mentioned Deezer or we7 and around one in 10 picked out Rdio.

However, according to figures from Spotify, Scotland is top of the pops when it comes to streaming with Edinburgh the top city using the service followed by Cardiff, Southampton and only then London. 

But Mark Mulligan, an expert on the digital music industry, believes the BPI research does not paint the whole picture.

He explained: "The BPI have put a very good positive spin the last couple of years on what's moving forward in the market however I have to counter that with the fact that a decade plus into this digital experiment the UK is still predominantly a CD market.

"Digital growth is happening well but it isn't happening quick enough and piracy remains a fundamental residual element of the UK music market. It is certainly contained but it isn't going away."

Mr Mulligan also believes there is still a strong market for CDs due to "gifting" but says bundles of music provided with TV and internet subscriptions are what will open the industry up to the mass market.

He feels streaming in the UK is still such a small part of the complex puzzle compared to the likes of Sweden, where 92% of music revenue comes from the service.

He added: "Since 2008, 5.5m people stopped buying music entirely in the UK so there's no doubt of the positives of the digital side but the contraction of the physical side of music buyers is an issue which hasn't been successfully addressed as yet.

"Streaming services are a small fast-growing part of the equation. It requires a leap of faith, the concept of moving from ownership to access, to ad-hoc spending to subscription spending, to cloud based access instead of something on your hard drive or shelf."

On social media, music is also found to be a major driver with four of the top five most-followed Twitter being musicians and on Facebook, three of the top 10 most-liked pages belonging to Rihanna, Eminem and Shakira.

Going forward, more than 50m connected cars with 4G or Wi-Fi networked audio systems are expected to be sold every year by 2017 and seven in 10 households are predicted to own a tablet within the next three years.

Networked home audio and speaker systems for streaming such as those from Sonos are also expected to rise in popularity with annual sales of more than three million by 2016. Already a fifth of Smart TV owners use theirs to access music services.

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