US Digital Music Sales to Eclipse CDs by 2010

Ars Technica reports: Despite the popularity of digital music, from single track purchases to subscriptions, physical media has continued to generate most music revenue in (almost) every market in the world. According to data from the International Federation of the Phonographic Industry (IFPI), though, that will soon change: revenue from digital music sales worldwide are on track to equal that of physical sales as early as 2016, and by 2010 in the United States.

Digital music first appeared as a statistic in IFPI's measurements in 2004, when it constituted just 2 percent of total music revenue. At the end of 2008, digital music accounted for 20 percent of the revenue of all music sales worldwide, and has steadily increased by about 5 percentage points every year since 2005. If the growth continues at this rate, worldwide revenue generated from digital music will equal that of all physical media sold sometime in mid-2016.

Consumers in the United States buy the most digital music relative to their total music purchases—revenue generated by digital music was 36 percent of the total at the end of 2008. The growth of the US digital market was quite constant from 2004 to 2007, then jumped 12 percentage points during 2008. Extrapolating this growth shows that digital music will account for the majority of major label revenue the US market in mid-to-late 2010.

Asia trails the US when it comes to digital music buying, but not in South Korea. The country is currently the only place in the world where digital downloads trump physical formats; South Korea's digital music sales were 56 percent of total music revenue in 2006.

In Europe, digital music growth has been slow, and constituted just under 11 percent of music revenue during 2008.

Because digital music hasn't been around for long, it's important to note that these dates are extrapolations based on known data. Nonetheless, these conservative estimates show that digital music is well on its way to eclipsing physical incarnations as the format of choice, and it's going to happen sooner than you might think.